Wednesday, August 1, 2012

Chesapeake Purchases Leases on 28,000 Acres in Ohio

From the Youngstown Vindicator:
For 7,000 property owners in Mahoning County, 7,000 in Trumbull and 450 in Columbiana whose “deep” mineral rights were transferred June 26 from Everflow Eastern of Canfield to Chesapeake Energy of Oklahoma, the result could be — eventually — higher royalties for the property owners than they now receive.
But having Chesapeake in possession of rights to the Utica shale formation won’t be as lucrative for the property owners as those who sold their mineral rights to BP America this spring, said Atty. Mark Finamore, who represents several townships and villages as well as private-property owners.
Rights to the Utica shale are sometimes referred to as “deep rights” because the Utica shale formation is lower in the ground than the Clinton shale, which Everflow has been mining in the Mahoning Valley for several decades.
Chesapeake bought the deep mineral rights to 28,000 acres for about $35 million from Everflow in February, according to a filing with the U.S. Securities and Exchange Commission.
It is not known how many of those 28,000 acres are in Mahon- ing, Trumbull and Columbiana counties. Calls to Everflow regarding the leases were not returned, and Chesapeake declined to comment.
“There’s no negative impact, no disadvantage to them for their rights being assigned” to Chesapeake, Finamore said of the property owners.
In fact, the transfer will be a “windfall” because if and when Chesapeake begins to drill on that land using horizontal fracturing, it’s likely that the company will be able to extract a much larger amount of gas and oil than Everflow could using the older vertical form of drilling, Finamore said.
The terms and conditions in the original leases with Everflow transfer to Chesapeake, Finamore said, including the percentage of royalties being paid — in most cases 12.5 percent.
Read the rest of the article here.

Connect with us on Facebook and Twitter!

No comments:

Post a Comment

Follow by Email