Lease & Royalty Payments

Anti-Drilling/Fossil Fuel | Cuyahoga County | Industrywide Issues | Lease & Royalty Payments | Ohio | Utica Shale

Cleveland Suburb’s Socialist Model for Restricting Utica Drilling
February 18, 2014February 18, 2014

Is Utica Shale drilling on the way to the Cleveland, OH area? It is if you listen to the mayor of the Cleveland uppity suburb of Gates Mills. Mayor Shawn Reilly wants landowners in Gates Mills to lock themselves into restrictive land trust deals–you know, to “manage” all that nasty, evil drilling if/when it gets there–in an estimated 10-12 years. This is not your typical landowner coalition being suggested. The good mayor wants landowners to sign over their mineral rights (via deed) to a “trust” managed by people appointed by the village (copy of the proposal embedded below). MDN’s advice to landowners in Gates Mills–run! Absolutely do not assign your mineral rights to a socialist organization that will not have your best interests at heart.

Here’s an article full of errors–like it takes 200 acres for a horizontal drill pad, when it actually takes about 20 acres…
Read More “Cleveland Suburb’s Socialist Model for Restricting Utica Drilling”
Bradford County | Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania

Bradford PA Landowner Rally over Chesapeake Royalty Shenanigans
February 17, 2014February 17, 2014

Landowners in Bradford County, PA feel like they’re getting screwed by Chesapeake Energy on royalty payments, a complaint they’ve been making for some time now (see Bradford County, PA Landowners Sue Chesapeake over Royalties). PA state law guarantees a minimum 12.5% royalty to landowners, but because Chesapeake keeps deducting post-production expenses (like pipeline costs, processing costs, perhaps marketing costs), landowners end up getting squat–in some cases a 1.5% royalty. The landowners have some righteous anger over the issue. More than 100 landowners and officials gathered at the Bradford County Courthouse in Towanda on Friday in a rally to raise awareness of the issue and to support passage of PA House Bill 1648, which would protect landowners from large deductions from their royalty checks for post-production costs.

We applaud these landowners and their elected representatives for seeking justice in this situation. The problem is, they’ve invited a fox into the hen house to help them out. State Senator Gene Yaw, whose district includes Bradford County, along with PA Gov. Tom Corbett, has asked PA’s anti-drilling Attorney General, Kathleen Kane, to investigate Chesapeake and this matter of landowners getting shorted on royalty payments. She’s only too glad to “help out.” Normally that would be a good thing, except Kane is just as likely to turn around and bite the people she’s supposed to be helping. She hasn’t met a driller yet she wouldn’t rather see behind bars (see PA AG Abuses Her Authority, Files Criminal Charges Against XTO). If it were up to Kathleen Kane, there would be no Marcellus drilling at all and consequently no royalties for landowners to argue about. We think it’s an ill-advised move to involve Kane, but that’s just our humble opinion…
Read More “Bradford PA Landowner Rally over Chesapeake Royalty Shenanigans”
Energy Companies | Lease & Royalty Payments | Ohio | Protege Energy | Utica Shale | Washington County (OH)

Marietta Residents Generally in Favor of Leasing City-Owned Land
February 12, 2014February 12, 2014

Seems to us, from an informal survey around town, that most residents of Marietta, OH are in favor of the city leasing 35 acres of municipal property to Protege Energy for the offered $4,750 per acre signing bonus and 17.5% royalty on any gas produced.

A sampling of reaction “around town”…
Read More “Marietta Residents Generally in Favor of Leasing City-Owned Land”
Belmont County | Energy Companies | Gulfport Energy | Lease & Royalty Payments | Ohio | Utica Shale

Village in Belmont County Signs Lease with Gulfport: $7250/Acre
February 10, 2014February 10, 2014

Bellaire is a small village in Belmont County, OH, near the border with West Virginia. Although Bellaire is small (population 4,300), as the old saying goes, location is everything. It just so happens Bellaire sits atop wet gas Utica Shale deposits and drillers in the area want to lease. So Bellaire officials last week signed a contract with Gulfport Energy for a “piddly” 66 acres of village-owned land scattered throughout the town. Just like another deal recently signed by Gulfport with the Shadyside Local School District, Bellaire is getting $7,250 per acre signing bonus and 20% royalties (see School in Belmont County, OH Gets $7,250/Acre from Gulfport).

The taxpayers of Bellaire will appreciate a $478,500 bonus check coming their way for the village coffers…
Read More “Village in Belmont County Signs Lease with Gulfport: $7250/Acre”
Harrison County | Lease & Royalty Payments | Ohio | Utica Shale

Cadiz, OH Considers Offer to “Flip” Royalty Rights for $11K/Acre
February 6, 2014February 6, 2014

This story is almost a month old, but somehow it missed our otherwise good radar. It involves landowners who want to sell their already-leased acreage royalty rights to investors–“flipping” the rights to royalties they may or may not get at some future point for money on the barrel head now. In this case, the landowner considering doing the flipping is the Village of Cadiz (Harrison County), OH, and the company that wants to buy their royalty rights is Flatiron Financial. Flatiron, you may recall, recently purchased a bunch of leases from some of Ohio’s Amish farmers (see OH Amish Flip Royalty Rights for Tax-Free Lump Sum Payment). Seems the flipping business is good and Flatiron is turning on the pressure in Cadiz, telling village officials they don’t have long to make a decision. The hand is slowly leaving the table…better act now! Right.

So what is Flatiron offering? Cash now for potential future royalties–and the cash is on the order of $11,000-$12,000 per acre. Note: This is not a one-time lease payment, it is signing over all future royalties (for decades to come) for a lump sum payment now. It becomes a game of poker, estimating your odds of whether you’ll get more “down the road” if you wait for monthly or quarterly royalty checks, or just take it all now–“bird in the hand” thinking. Tough call. What will the village leaders do? The clock is ticking…
Read More “Cadiz, OH Considers Offer to “Flip” Royalty Rights for $11K/Acre”
Chesapeake Energy | Energy Companies | Industrywide Issues | Jefferson County (OH) | Lease & Royalty Payments | Litigation | Ohio

OH Judge Says Filing Paperwork is Enough to Extend Lease
January 29, 2014January 29, 2014

Ohio landowners should be aware of an important court case just decided that says, in essence, filing paperwork is enough proof of a driller’s intent that a lease can be extended beyond the initial signing period. Several landowners in Jefferson County, OH signed a lease with Fortuna Energy in 2006 that was later sold to Chesapeake Energy (in 2010). The lease was for a 5-year period. Three days before the end of the lease Chesapeake filed a Declaration of Pooled Unit (DPU) with the Ohio Department of Natural Resources. That is, they told ODNR in essence “here’s a group of properties we intend to drill on soon” requesting permission to “pool” them together into a drilling unit. That simple act was enough proof, according to a U.S. District Court judge, to allow Chesapeake to extend the original lease beyond the original 5 years.

And so now the landowners are stuck waiting for Chesapeake to actually do something other than file paperwork. Good luck with that…
Read More “OH Judge Says Filing Paperwork is Enough to Extend Lease”
Lease & Royalty Payments | Ohio | Statewide OH

Lease Signing 101 for Landowners – A Short Q&A with OH Attorney
January 23, 2014January 23, 2014

What should landowners know–what questions should they have answers for–before they sign an oil and gas lease? Attorney Dan Gerken from Ohio law firm Bricker & Eckler tackles the important questions landowners should know the answers to in an online post that we think of as “lease signing 101.” It doesn’t hurt to cover the basics from time to time as new landowners are approached and begin the process of trying to figure out what they should do.

Here’s Dan’s good all-around “basics” Q&A advice:
Read More “Lease Signing 101 for Landowners – A Short Q&A with OH Attorney”
Belmont County | Energy Companies | Gulfport Energy | Lease & Royalty Payments | Ohio | Utica Shale

School in Belmont County, OH Gets $7,250/Acre from Gulfport
January 21, 2014January 21, 2014

Some 10 miles “as the crow flies” from Gulfport Energy’s super well, the Irons 1-4H (pumping out 30 million cubic feet of natural gas per day) sits the small community of Shadyside and the Shadyside Local School District. The school has just leased 20 acres to Gulfport for drilling under (not on), which may seem like not much. However, when you’re getting $7,250 per acre as a signing bonus, and 20% royalties on anything produced, the school’s 20 acres is way more than “not much.”

Shadyside School’s lease with Gulfport will net them an initial check for $145,000–just for the signing bonus. Gulfport is signing up the neighbors around Shadyside too. Will the school’s property be drilled under this year? Maybe! Gulfport is spending $630 million to drill 95 new Utica wells–many of them in Belmont County, OH where Shadyside is located and where Gulfport has had huge success already…
Read More “School in Belmont County, OH Gets $7,250/Acre from Gulfport”
Belmont County | Energy Companies | Lease & Royalty Payments | Ohio | Rice Energy | XTO

Belmont County School Gets Huge Checks from Utica Leases
January 20, 2014January 21, 2014

A local school district in Belmont County, OH–Union Local Schools–is reaping huge rewards from leasing land for Utica Shale drilling. Union Local Schools has already received a lease signing bonus check for $519,750, and a second check is on the way for $112,000–and that’s before a penny of royalties are paid (19% for one lease agreement, 20% for a second lease agreement).

Here’s the low-down…
Read More “Belmont County School Gets Huge Checks from Utica Leases”
Energy Companies | EQT Corp | Lease & Royalty Payments | Pennsylvania | Range Resources Corp | Washington County

Deal Done to Lease Washington County, PA Airport for Drilling
January 10, 2014January 10, 2014

MDN told you yesterday about an impending vote by Washington County, PA commissioners to lease portions of the county airport for drilling under (but not on) airport property (see Washington County, PA Airport Considers Offer to Lease). The vote was taken, and the deal was approved. In the end, it looks as though the county, which does not own the mineral rights for all 400 acres of airport property, does own the rights to at least 135 acres, which they leased for a signing bonus of $6,400 per acre and 18.25% royalties on any gas produced.

The taxpayers of Washington County should be happy that a check for $864,000 of “newfound money” is heading their way…
Read More “Deal Done to Lease Washington County, PA Airport for Drilling”
Energy Companies | EQT Corp | Lease & Royalty Payments | Pennsylvania | Range Resources Corp | Washington County

Washington County, PA Airport Considers Offer to Lease
January 9, 2014January 9, 2014

Washington County, PA commissioners will vote today on a proposed lease of the county’s airport property–to allow shale drilling under (but not on top of) the property. According to the deal offered, the county would receive $6,400 per acre as a signing bonus and 18.25% royalties on any gas produced. It’s unclear how much of the 360 airport-owned acres will generate revenue for the county because when the county purchased the property some landowners retained mineral rights. However, the deal, if signed, is sure to generate a boatload (or planeload) of money for Washington County.

Here’s more details about the proposed offer, and which drillers (plural) are cooperating to do the drilling…
Read More “Washington County, PA Airport Considers Offer to Lease”
Belmont County | Guernsey County | Harrison County | Lease & Royalty Payments | Ohio | Utica Shale

MWCD Open House on Leasing Piedmont Lake Property for Drilling
January 8, 2014January 8, 2014

Oh, we love it! The Muskigum Watershed Conservancy District (MWCD) has definitely seen the light. Although they were scared off from allowing shale drilling on Watershed-owned property early on, the board came around and eventually saw the light. Now they can’t get enough of shale drilling! They’re leasing MWCD-owned land for shale drilling, and they’re selling water to drillers–in many instances to frack wells being drilled on MWCD land. Beautiful!

The MWCD announced yesterday that so many drillers are knocking on their door to lease MWCD land in and around Piedmont Lake (in Belmont, Guernsey and Harrison counties) for Utica Shale drilling, they will have a public open house next week to discuss it. The MWCD owns some 6,600 acres around Piedmont Lake–and leases in that area have seen some of the highest signing bonuses and royalties in the entire northeast. We’re talking serious money (many many millions) for the MWCD if they lease that land for Utica Shale drilling…
Read More “MWCD Open House on Leasing Piedmont Lake Property for Drilling”
Energy Companies | Lease & Royalty Payments | Ohio | Protege Energy | Utica Shale | Washington County (OH)

Marietta, OH Offered $4,750/Acre + 17.5% Royalties for 35 Acres
January 7, 2014January 7, 2014

An offer–or more accurately a pre-offer–was made at the Marietta (OH) City Council meeting yesterday that would put an initial $166,250 in the city’s coffers from leasing 35 city-owned acres along the edge of the city for shale drilling. A driller is tentatively offering $4,750 per acre as a signing bonus, plus 17.5% royalties, for land in the area. Some city council members (Democrats) expressed concerns about the potential offer, and several residents from anti-drilling groups in attendance also added their ~~drivel~~ 2 cents.

Here’s more of the details about the offer–the driller who’s making it, when the drilling would begin, and what was ultimately decided as the next step at yesterday’s meeting…
Read More “Marietta, OH Offered $4,750/Acre + 17.5% Royalties for 35 Acres”
Lease & Royalty Payments | Ohio | Statewide OH | Utica Shale

OH Amish Flip Royalty Rights for Tax-Free Lump Sum Payment
December 24, 2013December 24, 2013

We may have just found a good reason to become Amish. The Columbus Dispatch has an article today about how some (many?) in Ohio’s Amish community are “flipping” their royalty rights–selling future potential royalty payments for a lump sum now–and leaving Ohio for greener pastures in PA or NY–in areas where shale gas drilling is either nonexistent or far less active than it is in the white hot eastern OH area.

The reason to become Amish before you flip your royalty payments? Apparently there’s an arcane section in our beloved tax code that allows the Amish to sell their royalty rights TAX FREE (if they relocate). The Amish get to keep 100% of the proceeds. To which we say: Pass the shoo-fly pie–we’re goin’ Amish!…
Read More “OH Amish Flip Royalty Rights for Tax-Free Lump Sum Payment”
Allegheny County | Energy Companies | Lease & Royalty Payments | Pennsylvania | Range Resources Corp

Range’s Big Money Deal to Drill Under Deer Lakes Park in SW PA
December 16, 2013December 16, 2013

MDN recently told you that Allegheny County, PA legislators, most of them Democrats, abandoned their fellow Dems to vote down a ban on drilling under county parks 9-2 (see Allegheny County (PA) Council Votes Down Drill Ban for Parks). We now know why. They all didn’t suddenly turn into pro-drillers–too many wacko constituents on their left to do that. No dear friends, just follow the money.

The signing bonus offered by Range Resources to legislators to drill under Deer Lakes Park is $3.5 million. But that’s peanuts if the drilling goes forward and if there’s as much gas under the park as Range believes there is. With a royalty rate of 17%, the county stands to make as much as a mind-blowing $70 million from that single county park! And of course the legislators will get to decide how all that cashola gets spent. It’s like putting a 10-ton carrot in front of Bugs Bunny. Just too much to resist…
Read More “Range’s Big Money Deal to Drill Under Deer Lakes Park in SW PA”
Energy Companies | Halcon Resources | Industrywide Issues | Lease & Royalty Payments | Litigation | Mercer County | Pennsylvania

Mercer County Landowners Suing Halcon Get Small Victory
December 12, 2013December 11, 2013

Last fall Halcon Resources signed letters of intent with landowners in Mercer County, PA to lease some 60,000 acres for drilling, via CX Energy (Co-eXprise). In September 2012 Halcon called a meeting with landowners and told them they would only proceed with leasing about half of the acreage (see Halcon Says No Drilling for Half of Mercer County Landowners). Needless to say the half that were jilted didn’t take it well. In fact, they felt defrauded by Halcon and filed a class action lawsuit in federal court against Halcon.

The U.S. Court of Appeals Third Circuit has just passed the case (“remanded” it) back to a Pennsylvania trial court, which is a small victory for the landowners. How so? Well, it’s complicated, but we’ll do our best to explain it…
Read More “Mercer County Landowners Suing Halcon Get Small Victory”