Last week MDN told you about a kerfuffle in Ohio between Carroll County commissioners and Sierra Buckeye, a driller with whom the county signed a lease in July 2012 for 481 acres of county-owned land (see Carroll County, OH Says Sierra Buckeye in Default on Utica Lease). The county says Sierra was supposed to drill by a certain deadline and did not do so, throwing the lease agreement “in default” and implying Sierra is subject to make extra penalty payments under the lease terms.
Sierra Buckeye contacted MDN to tell their side of the story. They claim that yes, they did ask for an extension of the lease terms until Nov. 1 of this year, but that Carroll County commissioners went silent and did not respond to multiple requests, and that no, they are not in default and don’t owe a penny more. In fact, they have canceled (or “released”) the lease per Carroll County’s request–transmitting the release last week. What miffs Sierra Buckeye is that they had to learn about the commissioners’ intentions by reading about it in the newspaper…
In May 2012 Houston-based driller Sierra Buckeye signed a deal with the Muskingum Watershed Conservancy District (in Ohio) to lease 185 acres of District-controlled land for $4,500 per acre plus 20% royalties on all gas produced–really good terms. In October 2012 Sierra Buckeye signed a deal with Carroll County, OH to lease 481 acres of county-owned land for the same terms, receiving a check for over $2 million as the signing bonus. However, built into the Carroll County lease deal are penalties if Sierra Buckeye does not begin drilling by certain deadlines.
The initial deadline came and went and the county extended it. The second deadline is now past and Sierra Buckeye is asking for a third deadline (November). The county has had enough and has told Sierra Buckeye the lease contract is now in default…
The Muskingum Watershed Conservancy District has just signed a deal with Sierra Buckeye of Houston to allow Utica Shale drilling on 185 acres of District-controlled land—and it got some VERY favorable terms for the deal.