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Thursday, July 5, 2018

Royalties Continue to Come in Utica Shale Country

From Business Journal Daily:
Cynthia Koonce has seen her share of battles with the oil and gas industry. 
She and others in southern Columbiana County and northern Carroll County sued Chesapeake Energy over what they believed were bogus lease terms in 2012. She’s also been vocal about issues that involve pipelines and other infrastructure. 
Ultimately, the litigation failed in court and “we got shot down,” Koonce says as she walks near the stalls of her sheep farm near Guilford Lake in Columbiana County. “They had such a good lease from their point of view.”

Koonce was among 24 parties in the area who signed oil and gas leases with Denver-based Anshutz in 2008. At that time, few were aware of the giant energy reserves in the Utica shale, and Anshutz was able to scoop up these leases at bargain prices, speculating they would be worth much more in the ensuing years as the Utica developed. 
“They knew something we should’ve known, but didn’t,” Koonce laments. 
Anshutz was right. In 2011, Chesapeake purchased the leases from the company for considerably more money, leaving a bitter taste in the mouths of those landowners who felt they’d been cheated. Once big energy companies swept in to the Utica, they were paying up-front bonuses as much as $5,000 to $6,000 per acre to secure leasehold agreements and offering in some cases 20% gross royalties on oil and gas production from drilled wells. Koonce’s lease calls for just 12.5% in royalty payments. 
“It wasn’t just that,” she recalls. “There were some other things too.”
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