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Friday, June 22, 2012

Columbiana County Commissioners Re-Negotiate Lease and Double Their Money

Last month we posted a story about Carroll County commissioners failing to accept a $5800/acre lease from Chesapeake and then seeing Chesapeake pull that offer off of the table, leaving only a $3500/acre lease offer from Rex Energy as a consolation prize.

Columbiana County commissioners just did the opposite.

They originally were set to agree to lease 568 acres for $2,700/acre to DPS Penn, an agent for Chesapeake Energy, in August of last year.  That deal also included 17.5% royalties.  The commissioners never signed that lease agreement, however.

Now, they've signed a lease for $5,850/acre and 20% royalties on 548 acres - the highest lease fee paid to any government body to date.  The county will now receive $3.2 million, although $1.5 million will go into an escrow account to help the Buckeye Water District pay a $4.8 million-plus court judgment owed to the city of East Liverpool.

From The Review in East Liverpool:
So what do commissioners intend to do with the remaining $1.7 million after it is received? Halleck said they will begin having those discussions, "but first and foremost I would like to see a rainy-day fund instituted in this county again." 
Halleck was referring to a fund created during his first term in the 1990s when commissioners set aside unspent revenue in a special fund to use only in emergencies or for special projects. 
"We did that years ago and it came in handy," he said, adding some of the money may have to be spent to pay higher-than-expected claims under the county's self-funded employee health insurance plan. 
Although commissioners gave Halleck authority to negotiate and sign the lease, the board voted at Wednesday's meeting to officially enter the agreement into the meeting minutes. 
The county is also in line to receive additional shale-related money for entering into an easement agreement with a midstream company wanting to run a pipeline across county property. 
Just as they did with DPS Penn, commissioners authorized Halleck to negotiate an easement agreement with Cardinal Gas Services LLC of Oklahoma City, which wants to run a pipeline under the county farm property in Center Township, which is where the jail and dog pound are located. 
This represents the next stage in the shale gas boom under way in the county, as midstream companies hired by drillers seek easements from property owners for pipelines to transport natural gas coming from local wells.
Read the rest of the article here.

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