Lease & Royalty Payments

Landowner Coalition News | Lease & Royalty Payments | Ohio | Trumbull County

Huge OH Landowner Group Close to a Lease Deal for 80K Acres
November 20, 2011November 20, 2011

The Associated Landowners of the Ohio Valley (ALOV) landowner group in eastern Ohio met on Saturday for an update on negotiations with energy companies to lease what may be the largest tract of land offered by a single landowner group in the entire Marcellus and Utica Shale plays. A deal is not yet done, but the president of ALOV, Robert Rea, says they may well have a deal done in the next several weeks.

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Lease & Royalty Payments | Ohio | Statewide OH | Utica Shale

Companies Target OH Landowners to Buy Royalty Rights
November 7, 2011November 7, 2011

A few weeks ago, MDN called attention to a new trend in the Marcellus and Utica Shale region—companies who want to buy landowners’ rights to future royalties (see this MDN story). It seems to be happening mostly in Ohio at the moment. These companies are offering to purchase a landowner’s potential future royalties for gas wells drilled on their property, paying them an up-front, one-time payment now. Think of those commercials you’ve heard where companies offer to pay lottery winners a lump sum now for the future long-term payouts, or settlements from a lawsuit with payments that stretch over years. That’s essentially what these companies are doing for landowners with leases in the Marcellus and Utica Shales.

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

Mystery Company Invests $2.14B in Chesapeake Utica Shale JV
November 4, 2011November 4, 2011

The Utica Shale in eastern Ohio, and Chesapeake Energy’s discovery that it contains oil and wet gas in addition to methane, is paying off big-time for the company. Yesterday, Chesapeake announced a major cash infusion from a new joint venture with a mystery/unnamed “international major energy company” to the tune of $2.14 billion. Some $640 million of that will be paid when the deal officially closes, and the balance of $1.5 billion will be paid by the end of 2014.

A third company in the joint venture is EnerVest. The joint venture values the land leased by Chesapeake and EnerVest at $15,000 per net acre. The previous highest deal for Utica Shale leases was Hess—for $8,000 per net acre. The overall deal between Chesapeake, EnerVest and the unnamed company is a bit complicated (see the press release below), but the gist of the matter is that Chesapeake will get enough money to fully fund their Utica Shale drilling program in Ohio, and the overall value of the joint venture means Chesapeake will eventually receive $3.4 billion.

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Broome County | Energy Companies | Inflection Energy | Lease & Royalty Payments | New York

Broome County NY Landowners Receive Money to Stay in Lease
November 4, 2011November 4, 2011

At least one energy firm has voted with its pocketbook that drilling will come, eventually, to New York State. Inflection Energy has just paid landowners in the Town of Maine (Broome County), NY $1,000 per acre to not bail out of the previous deal they signed.

In 2010, Inflection signed a deal that Maine landowners would receive a $6,000 per acre signing bonus over eight years plus 20 percent royalties. The initial payment was $1,000 per acre, the rest due after New York starts issuing permits for drilling. Problem is, those permits have not been issued and under the terms of the deal, landowners would have the right to vacate their leases and find a better deal later. So to keep them in the deal until permits are finally forthcoming, Inflection paid an additional $1,000 per acre (one-time payout) stipulating the landowners will not cancel their leases.

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Carroll County | Lease & Royalty Payments | Ohio | Utica Shale

Companies Offer to Buy Royalty Rights from Ohio Landowners
October 24, 2011October 24, 2011

Carroll County, Ohio is in the midst of a shale gas whirlwind. Signing bonus offers are being made to landowners in the $3,000-$5,000 range. But that’s not all. For landowners who previously signed, several years ago, some companies are offering to purchase royalty rights from landowners, even for wells that are not drilled and may never be drilled. Here’s the story from one such landowner:

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Indiana County | Lease & Royalty Payments | Pennsylvania

Banks Now Getting into Gas Advice Business
October 13, 2011October 13, 2011

Some banks are getting into the business of advising their customers, like farmers, on what kind of gas lease to sign when energy companies come knocking. The wealth management divisions of banks are branching out into what has been traditionally the turf of lawyers. One such bank is S&T Bancorp, based in Indiana, PA.

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Energy Companies | Lease & Royalty Payments | Pennsylvania | Range Resources Corp | Washington County

Canon-McMillan School Signs Gas Lease with Range Resources
October 3, 2011October 3, 2011

A school district in Washington County, PA (in western PA) just signed a five-year lease for school district property with Range Resources:

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Belmont County | Energy Companies | Exxon Mobil | Lease & Royalty Payments | Ohio

Belmont County, OH Landowners Sign Utica Shale Leases
September 19, 2011September 19, 2011

A number of landowners from Belmont County, Ohio made the trip to Wheeling, WV last week to sign leases to allow drilling in the Utica Shale on their property. The leases were signed with XTO Energy, now a subsidiary of Exxon Mobil. The price landowners got for Utica leases rivals the highest prices MDN has heard of for any Marcellus Shale lease, in no small part because of Chesapeake Energy’s recent discovery of natural gas liquids and even oil in the Utica Shale in Ohio.

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Butler County | Energy Companies | Exxon Mobil | Lease & Royalty Payments | Pennsylvania

South Butler School Signs Lease with Exxon Mobil Phillips
September 15, 2011September 15, 2011

The South Butler County School District (Butler County, PA) school board, after a year and a half of meetings and research, has voted to lease school district land for Marcellus Shale gas drilling. The lease is with Phillips Resources, recently bought by and now part of Exxon Mobil, and includes some interesting provisions, including an extra fee per well drilled, and an allowance for pooling, but not forced pooling.

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Chesapeake Energy | Economic Impact | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Ohio County | West Virginia

Ohio County Receives $8M (So Far) from Marcellus Gas Leases
August 16, 2011August 16, 2011

Ohio County, WV is reaping the rewards of leasing county-owned land for Marcellus gas drilling. The county’s land leases with Chesapeake Energy have already resulted in nearly $8 million in one-time lease payments for the county coffers, and soon will mean royalty payments too. Chesapeake has already completed a well on private land adjacent to (and drilling under) county land in The Highlands area. But gas from that well has not yet started to flow due to a delay in getting a pipeline built to the well. Once the pipeline is in place, the county will start receiving royalty checks from that well.

And within the next 12 months, Chesapeake will drill a new well, this time directly on county-owned land at the airport:

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

Chesapeake Threatens NY with Lawsuit on State Land Leases
August 8, 2011August 8, 2011

The New York Department of Environmental Conservation (DEC) leased 19,000 acres of state forestland to Chesapeake Energy and Fortuna Energy (now Talisman Energy) in 2006 to allow gas drilling. The deal provided state coffers with $9 million and the promise of 12.5 percent royalties on any gas produced. Those leases are due to expire Nov. 15 of this year, but Chesapeake has let the DEC know it believes the leases for its share (15,472 acres) should be extended, a legal phrase called force majeure, because of the moratorium that has been in place since 2008 on hydraulically fractured gas drilling. In a letter to the DEC, Chesapeake implied they will sue the state to extend the lease agreements if the state does not willingly agree to an extension.

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

Columbiana County, OH Renegotiates Lease with Chesapeake Energy After Oil Discovery
August 4, 2011August 4, 2011

News of Chesapeake Energy’s major oil discovery in eastern Ohio’s Utica Shale prompted officials in Columbiana County to renegotiate their about-to-be-signed lease with Chesapeake. It was a smart move for the county—netting them an additional $255K:

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Belmont County | Lease & Royalty Payments | Monroe County | Ohio | Utica Shale

Landowners in Belmont & Monroe Counties (OH) Receive $60 Million in Lease Payments from Wishgard; Tri Star Inks 127 New Leases
August 3, 2011August 3, 2011

Ohio continues to be red hot with respect to leasing mineral rights for shale gas (and now oil) drilling. Some counties, like Belmont, can’t keep up with the lawyers and researchers who pour over property records at the County Recorder’s office:

Read More “Landowners in Belmont & Monroe Counties (OH) Receive $60 Million in Lease Payments from Wishgard; Tri Star Inks 127 New Leases”
Carroll County | Chesapeake Energy | Columbiana County | Energy Companies | Lease & Royalty Payments | Ohio | Utica Shale

Chesapeake Energy Slated to Start Drilling in the Utica Shale in Columbiana County, OH this Fall
August 1, 2011August 1, 2011

Last week, Chesapeake Energy announced (via it’s quarterly earnings statement) a major revelation—that it has struck oil as well as natural gas liquids and natural gas, in the Utica Shale of eastern Ohio. Columbiana County, OH is in the hot zone and stands to reap millions in revenue.

In the run-up to the announcement, Chesapeake has been busy signing deals with landowners in Columbiana County, including leases with local municipalities and school districts:

Read More “Chesapeake Energy Slated to Start Drilling in the Utica Shale in Columbiana County, OH this Fall”
Chief Oil & Gas | Energy Companies | Industrywide Issues | Lease & Royalty Payments | Litigation | Pennsylvania | Sullivan County

Some Drillers Using Questionable Tactics to Hold Land Under Lease Beyond Original Term
July 25, 2011July 25, 2011

A number of landowners in Pennsylvania signed gas leases with energy companies more than five years ago for very low amounts—$2 per acre in some cases—as a signing bonus. Landowners, realizing that a contract is a contract, waited patiently for the expiration of the lease—typically five years. But then, at the last possible moment, sometimes just hours before the lease is due to expire, the energy company would clear a few trees or park a bulldozer on the land in order to comply with the terms of lease, thereby extending the lease indefinitely because they had “made an effort” to start drilling.

Case in point: Dave and Karen Beinlich. They signed a lease for $2 an acre, for a grand total of $234 signing bonus on their 117 acre farm.

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Lease & Royalty Payments | Ohio | Statewide OH

A Further Update, and a Correction, on Recent Ohio Lease Deals
July 22, 2011July 21, 2011

MDN has recently highlighted a few articles about the increase in activity in Eastern Ohio with new leases being signed. MDN is written from the Southern Tier of New York, so Ohio is not normally my beat. From the press accounts, it appeared to me (in fact it was referenced in the original articles) that the leases were related to the Marcellus Shale. But astute MDN reader and Ohio landowner Dan Ellis wrote a friendly note to let me know that I was wrong. Thanks Dan! I don’t want to perpetuate an inaccuracy.

Here is Dan’s email:

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