School District Near Pittsburgh Receives $628K Lease Payment

The South Butler School District (Butler County, PA) has just finalized a lease agreement with XTO Energy to lease 167 acres of school-owned land for $628,000, or $3,760 per acre, plus an 18 percent royalty on any gas produced. The deal was approved by the school board back in September (see this MDN story).

The final terms of the deal just adopted have been changed since September. Previously, the district was promised $3,750 per acre that would be paid “should natural gas be extracted.” Under terms of the final agreement, the district has already received a $628,000 payment, $3,760 per acre, up front.

A Pittsburgh-area school district has finalized a lease agreement with a gas drilling company and received $628,000 up front.

The Valley News Dispatch reported Wednesday that Phillips Exploration’s lease with the South Butler School District also carries an 18 percent royalty from any gas that is produced and sold from the acreage.

Phillips Exploration is owned by Texas-based XTO Energy, which is owned by ExxonMobil.

The newspaper reported that the lease requires district officials to approve the site of any well before Phillips drills, and any well or pipeline must be at least 500 feet from a district structure.

The school board approved the five-year lease with a 6-2 vote in September. It covers about 165 acres the district owns.*

*Ithaca Journal/AP (Dec 21, 2011) – Pa. school district gets $628K for drilling lease