Verde Bio Holdings Buys Marcellus/Utica Royalties in WV & OH
Over the years we’ve covered a number of stories about companies buying future royalty payments from landowners (and rights owners) for an upfront, one lump sum payment now. Normally the deals don’t disclose how much money changed hands for those upfront payments. We have some recent transactions from a newcomer to the Marcellus/Utica, a company willing to announce how much they paid to buy those rights, which caught our attention. We have financial details for a deal in the Marcellus, and details for a deal in the Utica to share with you. We have hard numbers for how much they paid to buy those royalty rights.
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All three M-U states received permits to drill new shale wells last week. Pennsylvania received 10 new permits. Ohio received 6 new permits. And West Virginia received 3 new permits.
The Battle Run Compressor Station, owned and operated by Williams and located in Valley Grove (Ohio County), West Virginia, exploded and caught fire Saturday night. Fortunately no one was injured and the fire was extinguished within a half hour. Williams has “isolated” the flow of gas to the facility while the incident is investigated.
The Northern Panhandle of West Virginia is doubly blessed. The Panhandle is four counties: Hancock, Brooke, Ohio and Marshall. Some add a fifth–Wetzel County. The first four counties in the list sit in a slice of real estate located between Pennsylvania and Ohio. The Panhandle currently produces 38% of WV’s natural gas production, and nearly 70% of its oil production. That’s the first blessing–good rock sits under those counties. The second blessing is the panhandle’s location between PA and OH. On one side, sitting just a few minutes away, is the mighty Shell ethane cracker plant, currently under construction in Monaca (Beaver County, PA). On the other side, also just a few minutes away, sits the proposed PTT Global Chemical ethane cracker site in Dilles Bottom (Belmont County, OH). The second blessing is this: many petrochemical and manufacturing companies will build, even relocate, their operations to take advantage of the raw materials that will come from both cracker plants. And guess where many of them will choose to locate? Yep–right smack in the middle, which is where the Northern Panhandle happens to be–sitting in the catbird seat…
Wheeling, West Virginia–known as “the Friendly City”–is about to get an even bigger smile on its face. Wheeling city leaders are about to sign a lease agreement to allow American Petroleum Partners to drill under several “old city landfills” that have been closed for decades. The up-front signing bonus for 336 acres of Wheeling-owned land will be $2 million–which works out to ~$5,952 per acre. Once gas begins flowing, the city will get an 18.5% royalty. The money will be used for “paving, playgrounds, economic development and other city functions.” Does American Petroleum Partners (APP) sound familiar? In December we brought you the news that APP had leased the 66-acre Wheeling Park High School campus for shale drilling–under (not on) the campus–for $6,000 per acre (see 
Deals to lease land for Marcellus and Utica Shale drilling happen on a regular basis–even today. Perhaps not as much as several years ago when large deals cut by landowner groups were headline news. But lease deals still happen–you just don’t hear about them because they are private deals (deal terms are not recorded at the county clerk’s office). However, every now and again a public entity–a town or school–will lease land for shale drilling. And that IS a matter of public record. When we spot such deals, we like to bring you the details. Such a deal was cut on Monday, by the Ohio County Board of Education. The Board of Ed signed a deal with American Petroleum Partners (from Pittsburgh) to lease the 66 acre Wheeling Park High School campus for shale drilling–under (not on) the campus. Which is so cool for a number of reasons. First of all, the deal includes a $6,000 per acre signing bonus, and if/when the gas begins to flow, an 18% royalty. Second of all, it’s a school! How many times have we read about nutjob anti parents with their knickers in a twist over putting a shale well more than a half mile away from a school, like we heard about endlessly from those in the Mars School District (Butler County). It was a long, hard fight, but we eventually won (see 
We have to confess this story is purely for amusement purposes–ours and yours. In our daily trawl of the news related to “Marcellus Shale” we spotted this headline: “Group hopes to add tiny houses to Wheeling Island.” We thought, What in the world do tiny houses on Wheeling Island (Wheeling, WV) have to do with the Marcellus? So we read the article to find out. Anyone watching HGTV has, at one point or another, watched a program about “tiny houses.” There’s even an HGTV show called Tiny House Hunters. “Tiny houses” are actual stick-built homes that are under 500 square feet of living space. Think really-small efficiency apartment. Except it’s a real house–sort of. The average American home is 1,780 square feet of living space. (If you’re not familiar with the tiny house movement, 
It’s not often these days we come across a story that mentions a new lease signed, and the amount of money paid as a signing bonus. Such is the case in Ohio County, WV. The Wheeling Park High School has just signed a lease with Southwestern Energy for $3,500 per acre for 66 acres–giving the school district $231,000 of newly found revenue, thanks to the Marcellus/Utica industry. No drilling equipment will be placed on or near school property. When the drilling eventually happens UNDER the school, and the wells begin to flow, Wheeling Park High School will then get more revenue–18% royalties on all gas produced…
It seems the northern panhandle area of West Virginia is sitting in the catbird seat. The geography of Hancock, Brooke, Ohio and Marshall counties sits in between Shell’s ethane cracker plant in Beaver County, PA on one side, and the proposed PTT Global Chemical cracker plant in Belmont County, OH on the other side. The PTT plant is not yet official, but is certainly looking that way. The next “gold rush” for states including PA, OH and WV are manufacturing plants that use the output from the cracker plants. And the northern panhandle, being between both locations, is getting a lot of interest and attention…
Statoil, based in Norway, is a big player in the West Virginia Marcellus Shale. Statoil paid property taxes to Brooke, Marshall, Ohio and Wetzel counties (all in WV) in 2015 and later found, during an audit/review, that they had overpaid those counties. They overpaid Brooke by $1.8 million, Ohio by $2.9 million, Wetzel by $1.6 million and Marshall by $342,000 (see 
If you’re in business, you’ve no doubt heard of “leading indicators” and “lagging indicators.” Example: When it comes to employment, a leading indicator would be an increase in work at temporary agencies (a rapid ramp-up in new employees), which means the economy is about to heat up and do better. A lagging indicator would be the official unemployment numbers–higher unemployment means an economy doing worse, lower unemployment means an economy doing better. When it comes to drilling activity, MDN has long used two metrics as leading indicators–that drilling activity is about to pick up. One is new permits issued. Drillers don’t spend big bucks to apply for permits they don’t intend to use–and use soon. However, there’s another, even earlier leading indicator, a predictor that more drilling is on the way in the next 6-12 months. That indicator is packed record halls at the local county clerk’s office. Before lease deals are signed, sealed and delivered, drillers must first ensure there is a clear title–that the person who says he/she owns the mineral rights for a given property, actually does. That’s where abstractors come in. Abstractors research deed records at the county clerk’s office. In the past we’ve noted there are some counties where there is a waiting line to get in to access records (see 
Lisa Badia, executive director of the Greater Wheeling Coalition for the Homeless “can’t be certain how many homeless people dwell in Hancock, Brooke, Ohio, Marshall and Wetzel counties,” but she is certain that part (much?) of the homeless problem is caused by Marcellus/Utica Shale drilling. Yep, sinking a hole in the ground causes homelessness. How? According to Badia, when drilling came to town 4-5 years ago, a bunch of out-of-staters showed up to work on drilling rigs (and for pipeline companies, etc.). Those out-of-staters began paying sky-high rental rates for apartments and trailers, driving up the price of rental housing throughout the region. And when that happened, folks on welfare could no longer afford to pay the rent (with our taxpayer money). If it’s a decision between booze and cigs or rent, you know what goes! So those po’ folk ended up sleeping on heating grates–because of that nasty, awful fossil fuel drilling…