Lease & Royalty Payments

Energy Companies | Halcon Resources | Lease & Royalty Payments | Mahoning County | NCL Appalachian Partners | Ohio | Trumbull County

Halcon Resources Pays $194M for Old Leases in Trumbull County, OH
August 3, 2012August 3, 2012

Bombshell: Halcon Resources Corp. is paying NCL Appalachian Partners $194 million (over $6,000 per acre) to take over land leases for drilling on 31,000 acres mostly in Trumbull County, OH (and about 3,000 acres in Mahoning County, OH). This is not money going to landowners but to the leaseholder, NCL. And it’s for old leases dating back to the 1960s.

By comparison, mass transfer of lease deals done by Chesapeake and others have been in the $1,000-$2,000 per acre range. But there is a difference: the lower-priced deals include a one or two percent royalty on anything produced going to the original leaseholder. Again, this is not landowner royalties, but leaseholder. It’s hard to follow the bouncing ball on this story.

The leases purchased by Halcon are not without potential problems (for Halcon) and opportunities (for landowners):

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Chesapeake Energy | Columbiana County | Energy Companies | Lease & Royalty Payments | Mahoning County | Ohio | Statewide OH | Trumbull County | Utica Shale

Chesapeake Buys 28K Acres of OH Leases from Everflow
August 1, 2012August 1, 2012

MDN reported on Monday that Chesapeake Energy had purchased the rights to leases and had transferred ownership of those leases for more than 14,000 acres from two counties in Ohio—Trumbull and Mahoning (see this MDN story). We now know that’s only half of the number of acres they transferred. We now also know who they bought the rights from and how much they paid for those rights.

Read More “Chesapeake Buys 28K Acres of OH Leases from Everflow”
Chesapeake Energy | Energy Companies | Lease & Royalty Payments | Mahoning County | Ohio | Trumbull County

Chesapeake Transfers more than 14K Leases in 2 Ohio Counties
July 30, 2012July 30, 2012

An excellent story in today’s Youngstown (OH) Business Journal covers the massive number of lease transfers taking place in Ohio—specifically in Trumbull and Mahoning counties. At the end of June, both counties received an order to transfer more than 7,000 existing oil and gas leases to a single lease for Chesapeake Energy—and that’s in each county!

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Industrywide Issues | Lease & Royalty Payments | Ohio | Regulation | Statewide OH

OH Dem Mark Okey Introduces Bait-and-Switch Bill on Leasing
July 27, 2012July 27, 2012

Ohio State Rep. Mark Okey (Democrat) recently introduced a House Bill 493, which he calls the “Truth in Leasing Act.” It supposedly goes after “big oil and gas” and their “predatory” leasing practices. But when you read the bill, a fair amount of it has nothing to do with leases but instead creates new drilling rules (a copy of the bill is embedded below—you read it and see what you think).

In typical Democrat/Marxist fashion, Okey rails against “big oil” in his statement about the new legislation:

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Energy Companies | Hilcorp Energy | Lease & Royalty Payments | Mahoning County | Ohio

Campbell, OH Leases Town Land for $5K/20% to Hilcorp
July 17, 2012July 17, 2012

The Campbell, Ohio council voted Monday to lease 167 owned by the town to Hilcorp Energy for $5,000 per acre and 20% royalties on any gas produced.

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Chesapeake Energy | Energy Companies | Lease & Royalty Payments | Ohio | Statewide OH

Chesapeake Seeks to Change Terms of OH Leases Already Signed
July 16, 2012July 16, 2012

According to an article in the Wall Street Journal, Chesapeake Energy is attempting to change the terms of leases with Ohio landowners—after the leases were signed. One of the issues faced by Chesapeake is that they have signed, or purchased, a lot of leases in Ohio’s Utica Shale (and other shale plays for that matter). In Ohio, it amounts to leases for about 5% of Ohio’s total land area.

In order to fulfill their end of the bargain, Chesapeake must drill wells on all that land within a certain period of time—usually within five years. At least one well must be drilled on a “unit,” usually defined as 640 acres of land, or one square mile. Multiple landowner properties are usually part of a single unit.

But Chesapeake has a problem: cash. They don’t have enough of it right now to drill all of those units to “hold” them. So they’re redefining the unit—they now want a unit to be two square miles in stead of one square mile.

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Energy Companies | Lease & Royalty Payments | Ohio | PDC Mountaineer | Washington County (OH)

Wolf Creek School District Leases to PDC Energy for $3K-18%
July 10, 2012December 19, 2012

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.

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Belmont County | Energy Companies | Hess | Lease & Royalty Payments | Ohio

Belmont, OH Attorney Sues Hess to Dissolve Lease
July 9, 2012December 19, 2012

An attorney in Belmont County, Ohio—Rebecca Bench—is suing to end a lease deal she and her husband signed in 2008, originally with Mason Dixon Energy for $100 per acre. Mason Dixon later sold the lease to Hess Corp.

The $100 per acre Bench and her husband were paid is a fraction of recent transactions, some as high as $5,900 per acre. Bench says Mason Dixon was never registered to do business in Ohio, meaning the original contract was fraudulent.

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Chesapeake Energy | Columbiana County | Energy Companies | Lease & Royalty Payments | Mahoning County | Ohio

Salem, OH to Sign Lease Deal with Chesapeake for $7K+20%
July 6, 2012December 19, 2012

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 | Columbiana County | Energy Companies | Lease & Royalty Payments | Ohio

Columbiana County Lease with Chesapeake, Highest Bonus Ever
June 21, 2012June 21, 2012

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.

The deal makes Columbiana breaks the record as the highest signing bonus granted to any government body for a Utica (or Marcellus) Shale lease deal.

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Chesapeake Energy | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | New York | Statewide NY

Victory for NY Landowners in Chesapeake Force Majeure Case
June 15, 2012June 15, 2012

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 this MDN story from May 2011 for history and background).

As a brief background, a number of New York landowners—many of them in the Southern Tier area of New York—signed gas drilling leases in 2000 with small drilling companies. The leases had a 10-year term. Most of the landowners got $3 per acre as a signing bonus. Those leases, along with leases signed prior to 2000, were bought by Chesapeake in the mid-2000s. In 2009, Chesapeake sent letters to New York landowners invoking the force majeure clause, which is legalese for “we’re extending the contract term due to extenuating circumstances, which we believe is our right to do.” The extenuating circumstance? The moratorium on high volume hydraulic fracturing that was implemented by then-Gov. David Paterson in 2008.

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Brooke County | Chesapeake Energy | Energy Companies | Equinor/Statoil | Industrywide Issues | Lease & Royalty Payments | Litigation | Range Resources Corp | West Virginia

WV Couple Challenges Chesapeake Lease Renewal
June 13, 2012June 13, 2012

A husband and wife in Brooke County, West Virginia are suing to have their 5 year-old lease, which is now expired and up for renewal, nullified so Chesapeake (now the owner of the lease) cannot automatically renew it as they are attempting to do.

Increasingly landowners who signed leases that are now expiring after a customary 5 year period face the same issue—and drillers are trying to lock them in under the terms of lease for a new period of time.

Here’s the story of Ramon and Lois Bowen:

Read More “WV Couple Challenges Chesapeake Lease Renewal”
Columbiana County | Industrywide Issues | Lease & Royalty Payments | Litigation | Ohio | Utica Shale

Columbiana County, OH Landowners Seek Minimum Royalty Law
June 8, 2012June 8, 2012

A few weeks ago MDN highlighted a story about a couple living in Columbiana County, Ohio who were due to get more than $375,000 in lease payments from Chesapeake Energy for their 65 acres of property, but the deal fell through when Chesapeake discovered the land under the property was already locked into a decades-old lease by Columbia Gas Transmission. The couple is suing to be released from that contract (see this MDN story).

We have word today that other landowners from the same area also affected by the Columbia lease are trying a different tact: Pass a state law imposing minimum royalties.

Read More “Columbiana County, OH Landowners Seek Minimum Royalty Law”
Lease & Royalty Payments | Pennsylvania | Statewide PA

PA DCNR Wants Money for Drilling Under Public Streams/Rivers
June 4, 2012June 4, 2012

The Pennsylvania Department of Conservation and Natural Resources (DCNR)—not to be confused with the Department of Environmental Protection (DEP)—has found a new and novel way of extracting money from natural gas drillers in the state. If drillers have horizontally drilled underneath a public stream or river, the DCNR is going to ask those drillers to pony up with lease and royalty payments to the DCNR’s coffers. This one is going to be a lawyer’s delight.

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Columbiana County | Lease & Royalty Payments | Ohio | Statewide OH

The Value of Land for One Eastern Ohio Landowner
June 4, 2012June 4, 2012

How much are your lease rights worth? It all depends on where your land is located. Right now, eastern Ohio seems to be commanding the best lease and royalty deals. PBS station WVIZ in Cleveland aired a story yesterday about an 82 year-old woman, Jackie Pendleton, who lives by herself on 62 acres of land in Columbiana County, OH. The offers she’s received for both her mineral rights and the outright purchase of her entire property have made her head swim.

Read More “The Value of Land for One Eastern Ohio Landowner”
Lease & Royalty Payments | Statewide WV | West Virginia | Wetzel County

Royalty & Production Figures from WV Northern Panhandle
June 4, 2012June 4, 2012

An excellent article in Sunday’s The Intelligencer/Wheeling News-Register takes a look at production numbers for a sampling of natural gas and oil wells in the northern panhandle of West Virginia. Chock full of numbers, some of the gems include:

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