Chesapeake Energy | Columbiana County | Energy Companies | Lease & Royalty Payments | Mahoning County | Ohio
Salem, OH to Sign Lease Deal with Chesapeake for $7K+20%
The City of Salem, Ohio, which straddles both Columbiana and Mahoning counties, is due to sign a three-year oil and gas lease with Chesapeake Energy today for 381 acres of land owned by the city.
The deal calls for an initial $3,500 per acre signing bonus and 20% royalties, with an additional $3,500 per acre for a three-year extension. All told, it will be $7,000 per acre for a six-year lease—one of the highest amounts MDN has seen (if the three-year extension is exercised).
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Chesapeake Energy settled a case with several landowners in the small community of Wyalusing (Bradford County), PA who say their well water was contaminated by Chesapeake’s nearby drilling activity. Three families will receive $1.6 million from Chesapeake which includes buying out their homes so they can move. Some 30 other area families are in various stages of litigation with Chesapeake over the same issue.
Columbiana County, OH has just signed a deal with DPS Penn (an agent for Chesapeake Energy) to lease 548 acres for Utica Shale drilling. And they astutely doubled their money from the original offer from DPS a year ago. The new terms of the deal, just signed, are for $5,850 per acre and a 20 percent royalty. Columbiana also negotiated the lease term down to three years. A typical lease is five years.
In a major victory for New York landowners, Attorney General Eric Schniederman’s office reached a settlement with Chesapeake Energy to allow 4,400+ landowners with a collective 264,000 acres to renegotiate old gas drilling leases that Chesapeake was attempting to extend using the “force majeure” clause. MDN has followed this story for more than a year (see 
Aubrey McClendon, CEO of Chesapeake Energy, had a tough day last Friday at the annual shareholder’s meeting at Chesapeake’s headquarters in Oklahoma City . Shareholders passed a number of votes against the sitting board and against McClendon. McClendon had previously announced that Chesapeake’s two largest shareholders, Southeastern Asset Management and Carl Ichan will be allowed to nominate four new board members and a new chairperson, replacing more than half of the board. The new members are slated to begin later this month. Still, shareholders withheld approval of two sitting board members up for re-election. They both promptly offered their resignations.
MDN started seeing references yesterday to a story that Chesapeake Energy has put some of its Ohio Utica Shale acreage on the auction block. First came stories that Chesapeake says the value of each acre it controls in the Utica Shale is worth between $13,000 and $17,000: