The price for Utica Shale acreage is rising at a surprising clip if a lease agreement signed this week by the Board of Commissioners of Columbiana County, OH, and an agent for Chesapeake Energy Corp. is any indication.
The board approved during its meeting Wednesday a three-year gas and oil lease agreement with DPS Penn for 548 acres at $5,850/acre, according to minutes of the meeting. The $3.2 million deal comes less than a year after the commissioners voted last August to a approve a letter of intent to sign a lease proposed by DPS that would have fetched $2,700/acre; however, that lease was never signed.
Under terms of the agreement, Columbiana County, which is in northeastern Ohio, will receive 20% royalties on gross revenues from any drilling on the property.
Board of Commissioners President Mike Halleck negotiated and signed the lease, which was approved by the board 3-0 Wednesday. The final deal is for 20 acres less than the initial proposal because of title problems and other issues, according to Lisbon, OH's Morning Journal News.
In September Rex Energy Corp. said it had acquired the rights to lease about 11,000 net acres in neighboring Carroll County, OH, for about $3,600 per acre, plus 20% royalties with no deductions (see Shale Daily, Sept. 12, 2011). Four months before that, Chesapeake paid a reported $2,250 per acre plus 17.5% in royalties for about 75,000 acres in eight Ohio counties (see Shale Daily, May 11, 2011).
Chesapeake, M3 Midstream LLC and EV Energy Partners LP are developing what they claim will be the largest integrated midstream service complex in eastern Ohio to serve Utica Shale production in Columbiana County (see Shale Daily, March 16). Engineering and procurement has begun for the project, with the first cryogenic processing and fractionation plants scheduled to be in service by the second quarter of 2013, according to Chesapeake.