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Wednesday, May 9,2012

Landowners’ group renews leasing pitch

With the prospects for oil-and-gas leasing in Athens County going into some serious flux, an out-of-county landowner organization is making a renewed pitch to sign up property owners.

America's Choice Realty has purchased a full-page ad in The Athens NEWS, warning, "Don't be fooled again with a maybe! Don't sign an oil & gas lease until you hear about the offer our group has received, including a GUARANTEED up-front payment."

The group is holding a meeting Tuesday evening at The Market on State mall in Athens.

The meeting comes in the wake of news that Cunningham Energy, a West Virginia-based company that had signed leasing options with hundreds of Athens County landowners, is having trouble finding a big venture partner that will fund them.

A local attorney, John Lavelle, had worked out standard lease terms that included $2,500-per-acre signing bonuses and 16 percent royalties on oil and gas production. Landowners with more than 40,000 acres in the county signed up with Cunningham under the Lavelle lease.

After first asking for a two-month extension on the walk-away date for the leases, however, Cunningham has now offered a new deal. For landowners who want to stick with the company while it seeks a big venture partner, Cunningham will pay a guaranteed initial signing bonus of $125 an acre.

The company will also commit to drilling five test wells in Athens County, to see how oil-rich the Utica shale is here. Lavelle has suggested that a recent state geology report suggesting the county is outside the best part of the Utica shale play have considerably damped down enthusiasm for the prospects of a drilling boom here.

Lavelle claims that if the test wells show good results leading to widespread drilling, the new lease terms will eventually pay off at $5,700 per acre, but on the "back end," not up-front.

The landowner group associated with America's Choice has been competing with Lavelle and others to sign up landowners, with many local people wondering whether it's smarter to sign up early for a guaranteed payout, or gamble on the possibility that leasing offers may skyrocket later.

In February, The Athens NEWS spoke with Pennsylvania attorney Jake Polochak, whose law firm is spearheading the landowners' group. At that time, Polochak said that when his group marketed some Athens County acreage at a big oil-and-gas expo in Houston, some investors expressed interest in paying up to $3,500 an acre plus 18 percent royalties.

He also stressed, however, that what happened with Cunningham's lease options – then set to expire by March 15 – would have a big influence on what other investors were willing to pay for leases here.

"I believe we won't see an offer (on our acreage) until after the 15th," Polochak told the paper at that time.

A Cunningham representative has accused Polochak's group of falsely telling local landowers that it was in negotiations with Cunningham.

At a meeting in Athens last December, Polochak claimed that it had made a "firm offer" to Cunningham for a large block of acreage in the area.

The group's ad in The NEWS states that there will be a "members only" meeting at 6 p.m. next Tuesday, followed by an open public meeting at 7:30 p.m.

In related news, a local developer on Sunday confirmed that he had filed a permit application with the state for a vertical well that will be drilled into the deep Utica shale layer near Guysville. If approved and drilled, this will become the first Utica well in Athens County. It's expected to be a combination test and production well, though the latter is obviously dependent on what the former reveals.


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Please do your own research. I've seen many of these 'member' groups claim to negotiate and protect the land/mineral owners, but in reality, really only serve to make a profit acting as a middle-man from the bonuses/delay rentals from the signing of a lease. If one is too lazy to do their own research and negotiations with a landman, a much, much better way to go is to hire a lawyer. For example, a lawyer will represent YOU in negotiations of a lease, whereas these groups represent MANY PEOPLE. Because of this fact alone, I have seen these groups lose any signing of a lease because of this inefficiency. 

In fairness, I have not heard of this group specifically. I am just saying that one should do their own research, whether it be on one of these kind of goups, an oil & gas company or brokerage.