Wolf Creek School District Leases to PDC Energy for $3K-18%

At a Monday meeting, the Wolf Creek Local Board of Education in Waterford (Washington County), OH voted to lease the mineral rights under school district property for Utica Shale drilling to PDC Energy. The lease terms are $3,000 per acre signing bonus and 18% royalties. School district officials, however, do not want any active drilling on the property—only underneath the property.

The board voted 5-0 to sign a lease with Colorado-based PDC Energy Inc. In return for the rights to drill for oil and natural gas in the Utica and below, the district will receive an initial bonus payment of $3,000 an acre, as well as an 18 percent royalty on anything produced from beneath the land.

The board said the signing of the lease should be contingent on the inclusion of clauses prohibiting any actual drilling on school property, as well as a ban on traffic crossing the property.

“Basically we don’t want them on our property. Just underneath us,” board member Joe Campbell said.

Superintendent Bob Caldwell said he didn’t expect a problem with either clause.

The deal is expected to yield the district at least $372,000, but could be worth even more depending on exactly how much land is involved.

Caldwell said parcels listed on the Washington County Auditor’s website list the district’s property at more than 180 acres. However, there’s a discrepancy on two of the parcels that led him to think they might be duplicates. If so, the district only owns 124 acres.

Caldwell said he expects that to be cleared up as PDC does title research prior to the lease agreement being executed.

The board is taking advantage of an offer made to landowners in Adams Township, which was also extended to Waterford Township members of the Southern Ohio Energy Consultants Landowners Group, to which the district belongs.

Board member Neil Huck said he had some reservation about the lease including mineral rights below the Utica.

“If they want the Utica, that’s good. If they want to go deeper, they pay us more,” he said.

But Huck said the provision does keep a company from drilling a shallow well just to hold onto the lease longer, and he ultimately voted for the measure.*

*Marietta (OH) The Marietta Times (Jul 10, 2012) – Wolf Creek OKs lease of mineral rights on district land