After months of negotiations, a lease that would provide Antero Resources Corp. with limited surface rights and access to nearly 7,000 acres of prime land in Belmont and Harrison counties, OH, has been approved by the Muskingum Watershed Conservancy District's (MWCD) board of directors.
The MWCD covers more than 8,000 square miles and spans five counties along with portions of 22 others. It acts as a political subdivision and collects property taxes from landowners in 18 Ohio counties to support a system of reservoirs and dams that help reduce floods and preserve water.
On Friday, the board approved a lease to Antero for 6,300 acres of property under and around Piedmont Lake. Earlier this month, the MWCD said it was negotiating with Antero for 6,700 acres (see Shale Daily, April 3). MWCD said the terms for another 300 acres in the area are being finalized to add to the lease at a later date.
Under the deal, the MWCD will receive a $15,000/acre signing bonus and 20% in royalties from production in a nod to the growing value of prime acreage in southeast Ohio, where operators are scooping up what little mineral rights are left in the Utica Shale.
MWCD officials said they expect Antero to establish two well pads on the property and others on private land adjacent to it. The lease comes with several environmental safeguards, including greater oversight of erosion control, surface operations and reclamation efforts. It also follows a public meeting and a public comment period.
Last year, MWCD signed a non-development lease with Antero for 6,553 acres it owns at Seneca Lake in Guernsey and Noble counties (see Shale Daily, Feb. 21, 2013). Before that, in 2012, the district signed a non-development lease with Chesapeake Energy Corp. in Carroll County and another in 2011 with Gulfport Energy Corp. in Harrison County. Prior to its latest deal with the district, Antero had more than 107,000 acres under lease in Ohio, where it has been consistently increasing its production (see Shale Daily, Feb. 27).
Although the MWCD has managed oil and gas leases on its property since it was established 80 years ago, horizontal Utica leases have generated $77.8 million in signing bonuses and roughly $3 million in royalty revenue. At its meeting on Friday, the district's board approved a 50% reduction in property tax assessments beginning in 2015 for commercial and residential landowners that pay the taxes (see Shale Daily, April 16).
The reduction will result in a $5.5 million cut in the amount of assessments the district collects. The board of directors plans to use windfalls from its Utica leases to help offset the cut and MWCD will periodically review its oil and gas revenues to determine if more reductions could be made.