Notes from the Utica – July 2011

Written by about Drilling and Producing + Leases on June 22, 2011

Oil and gas leasing in Ohio has continued at a rapid pace. Columbiana County, Jefferson County, Mahoning County, Caroll County, Stark County and Harrison County continue to generate signing bonuses in the $2,000/acre and up range, with prices in Harrison County (where a rumored huge well has been drilled) reportedly hitting over $3,000 per acre. Outside of that core area, in Trumbull County, Portage County, Summit County, and Tuscarawas County, activity is pretty brisk, but at lesser per acre amounts. Going beyond those counties, we are seeing new entrants, besides Chesapeake Energy, into the Utica shale play who are leasing in Medina County, Ashland County, Wayne County, Holmes County, Coshocton County, Belmont County and other areas. These new players are paying considerably less per acre than what we have seen in Chesapeake’s core area.

Approximately 5-6 horizontal Utica shale wells have been drilled to date, with only a few of those having been fully completed and put into production. We are likely to see some dozens more drilled by year end. Leasing trends are going to be dependent upon the success of these initial wells.

Finally, in some of the core areas, landowners with old leases are being courted by a company known as MC Mineral Company, LLC to buy out their mineral rights with a one-time payment. MC Mineral Company, LLC would appear to have a relationship with Chesapeake Energy. It need be understood that if you are selling your mineral rights, this is different than signing a lease. Under a lease, a landowner is entitled to future royalties if and when a well would be drilled. A sale of mineral rights would cut off an landowner’s right to future royalties. Tread carefully if you are considering such a sale of mineral rights. I am in the process of putting a group of landowners together to negotiate the sale of their mineral rights, so feel free to drop me a line if you have received a letter from MC Mineral Company on this issue.

About Eric Johnson

ERIC C. JOHNSON attended Ohio State University, earning a degree in economics and then graduated from the University of Cincinnati Law School in 1983. His areas of practice are personal injury law, real estate, oil and gas, contracts, litigation and appeals.