After months of conducting their own research into the booming oil and gas industry, thousands of landowners with the Associated Landowners of the Ohio Valley (ALOV) have recently signed Marcellus Shale lease agreements with Chesapeake Energy Corp.
ALOV board member Bob Rea told NGI's Shale Daily that landowners with the nonprofit organization signed five-year leases custom made for them with Chesapeake in April, but he declined to reveal royalty rates. The company can extend the leases for another three years at a pre-determined price.
"We need the drillers," Rea said Monday. "It's an industry that we have to have. We want to be partners, but we're not looking to be belligerent partners. During the negotiation process, Chesapeake has shown a true effort to appreciate and understand what our expectations have been and they've given us some provisions that they don't typically do."
Chesapeake spokesman Jacque Bland confirmed Monday that ALOV had signed leases with the company, and that ALOV represents more than 2,000 landowners who collectively own about 75,000 acres in eight counties.
Rea said ALOV began as a series of neighborhood groups in northeastern Ohio called together to try to make sense of an industry climate where land agents were eager to get landowners to sign over their mineral rights.
"We were being approached to lease something, and many of us felt that we didn't know what questions we should be asking," Rea said. "We felt we needed to inform ourselves about what was out there in the way of options."
Rea said that in October, internal and external factors led two or three of the neighborhood groups to sign leases with land agents but at terms that weren't as favorable as they would have liked. Rea said, ALOV then decided to form a negotiating unit and to discuss oil and gas leases with the drillers directly.
"It's just absurd that these (land agents) can go out and write these leases," Rea said. "Of course they're not holding a gun to somebody's head, but they certainly aren't laying out for the landowners any clarity over what they're signing. The people have no clue, and even the attorneys didn't understand these new leases. It was one of the things that really got my fuse lit."
Once the negotiating unit was formed, Rea said ALOV grew from a small core group to more than 2,000 members. The acreage they own spans Trumbull, Mahoning, Portage, Stark, Tuscarawas, Harrison, Jefferson, Carroll and Columbiana counties. Rea himself owns a 40-acre farm near Salem, OH.
"We felt that if we were going to negotiate we needed a large body of people to affect the best terms," Rea said. "Chesapeake and the other drillers are looking to get as large of a foothold as they can get. We felt that the best thing for us to do was to organize and stick together."
Ohio has seen a flurry of oil and gas lease activity. Land agents have been the driving force behind many leases, but in April the discovery of a five-page document alleged that some agents may be using deceptive practices to get landowners to sign agreements (see Shale Daily, April 26). Meanwhile the Ohio General Assembly is considering a bill that would make all property owned by the state government -- including state parks -- available for oil and gas leases (see Shale Daily,March 8).