County holds breath awaiting 9-figure payoff

Athens County is now less than a month away from a potential influx of up to $100 million worth of lease payments to local property owners for oil drilling – and possibly much more than that.

Cunningham Energy, LLC, has leased about 41,000 acres of land in the county for drilling, using a lease prepared by local attorney John Lavelle.

Those leases have a collective deadline of March 15, by which date Cunningham must either pay a signing bonus based on the acreage of each lease, or walk away from all of them.

As that "drop-dead" date gets closer, The Athens NEWS will update the story in each twice-weekly issue.

Lavelle estimates that if all the property owners who used his lease turn out to own their mineral rights, the collective up-front paycheck for county landowners from the leases will hit nine figures.

"It's safe to say it's around $100 million," the attorney said Wednesday.

Lavelle's lease calls for a signing payment of $2,500 per acre – or half that amount if the landowner is guaranteed that no drilling rig will be placed on his or her property.

However, Lavelle noted, Cunningham – whose representatives have lately been refusing to share much information with The Athens NEWS – has indicated to him that the company has about one-and-a-half times as much acreage under lease in the county as it has using the Lavelle lease. Therefore, he suggested, the ultimate payoff from drilling leases may be significantly higher than $100 million.

"They tell me the whole package is closer to 100,000 acres," Lavelle said – though he noted that he knows nothing about the financial terms of any leases other than those based on the one his firm developed.

The prospect of widespread use of the horizontal hydraulic fracturing method to drill for oil in the Utica shale bed under Athens County has triggered serious concern and opposition among local environmentalists and farmers.

Recently, critics have been condemning property owners for leasing their land for possible fracking, arguing that the drilling process will have negative impacts that extend much farther than just their own property. Drilling supporters have responded that environmental concerns have been grossly exaggerated and that nobody should tell landowners what to do with their own land.

Cunningham's plans have always been contingent on the participation of an as-yet unnamed larger corporate venture partner to put up the money. One way or another, county residents should find out what's going on by the middle of next month.

In addition to the signing bonus in the Lavelle lease, property owners would receive 16 percent royalties on gross well production, an amount that could dwarf the signing bonus amounts if the wells produce a lot of oil.