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Saturday, February 6, 2016

ENERGY LEASES REALIZE REVENUE

Lease agreement on tracts in Bradford and Sullivan counties assures more than $14 M.

An agreement approved today by the Pennsylvania Board of Game Commissioners is solidifies more than $14.6 million – revenue that had been anticipated written into the budget for the current fiscal year.

Commissioners said, given the agency’s fiscal crisis, which results from license fees not being adjusted for inflation in more than 17 years, it’s important to understand the sum has already been built into the budget, and is not a sudden influx of revenue that will fix fiscal problems.

The agreement involves the lease of the Game Commission’s oil and gas rights under 5,870 acres of State Game Lands 12 and 36 in Overton and Elkland townships in Bradford and Sullivan counties.

The agreement is the result of a competitive bid that was announced in November and opened in December.

Chief Exploration and Development LLC of Dallas, Texas was the lone bidder, agreeing to pay a one-time bonus payment of $2,500 per acre for a five-year paid-up primary term, and 20.55 percent in royalties for all oil/gas and other liquids or condensates produced and sold from the proposed tract. Additionally, the bid provides the Game Commission a well-pad location fee of $75,000 per well pad, if well pads are necessary on the game lands surface. The agreement restricts surface use to two well pads and access thereto for development.

Oil and gas development will be regulated by the Commonwealth’s Oil and Gas Regulations and the Game Commission’s Standard Restricted Surface Use Oil and Gas Development Cooperative Agreement to include a $50,000 performance bond. The agreement will include standard wildlife and environmental protection measures. The total bonus payment will amount to approximately $14,675,000. Further, the commission will receive an annual payment of $1,400 in lieu of free gas usage.

Commissioner James Daley, who as a consultant works with several firms in the Marcellus shale industry, complimented Game Commission staff for the terms they negotiated in the agreement, noting that contracts carrying royalty rates and bonus payments at this level are rare in today’s market.

In a separate vote, the commissioners today approved an agreement with EQT Production that will result in a $917,000 bonus payment.

EQT, of Canonsburg, Pa., requested the Game Commission offer its oil and gas rights under a nearly 306-acre portion of State Game Lands 245 in East Finley Township, Washington County.

EQT has a strong, privately owned oil/gas lease position surrounding this portion of the game lands. The company has initiated unconventional well drilling and development in the vicinity of the proposed tract, and also has the ability to unitize and develop the Game Commission’s oil and gas reserve under the proposed tract by horizontal drilling with no surface use or disturbance to the game lands.

The terms of the agreement are a five-year paid-up Non-Surface Use Oil and Gas Agreement, a $3,000 per net oil and gas acre bonus payment and 20 percent royalty for all oil/gas and other liquids or condensates produced and sold from the proposed tract.

The bonus payment may be deposited either into the Game Fund or into an interest-bearing escrow account to be used for the future purchase of wildlife habitats, lands or other uses incidental to hunting, furtaking and wildlife-resource management.

Future rentals and royalties owed the Commission shall be directly deposited into the Game Fund.

The commissioners today also approved a coal-mining agreement that will permit Amerikohl Mining, Inc., of Butler Pa., to mine and remove approximately 15 acres of Lower Kittanning coal beneath a portion of State Game Lands 153 located in West Wheatfield Township, Indiana County.

The Game Commission owns the surface and surface-support rights, but does not own the coal. Amerikohl has secured a lease with the coal owner. The terms are a five-year agreement, a royalty rate of 6 percent of the F.O.B. pit price for all coal mined and sold from the premises, or $2.50 per ton, whichever the greater.

In exchange for the agreement, and to offset the surface impact to the game lands, Amerikohl shall convey to the Game Commission a minimum of 30 acres of acceptable land. Royalties will be credited against the land value and once reached, payment of royalties will begin at the greater of the rates noted above.

All coal royalty payments will be deposited in the Game Fund. Mining will be regulated by the Commonwealth’s Mining Regulations and the Commission’s Standard Surface Coal Mining Agreement.

TWO TRACTS APPROVED FOR PURCHASE

Game lands in Cumberland, Snyder counties would grow.

The Pennsylvania Board of Game Commissioners today approved the purchase of two tracts adjoining state game lands in Snyder and Cumberland counties.

The 10-acre tract in Adams Township, Snyder County, is an indenture to State Game Lands 188. It is being offered for sale by the estate of Norma M. Fetterolf at an option price of $20,800 lump sum, to be paid with money from the Game Fund.

The property is forested with oak, maple and hardwoods and it adjoins Pennsylvania Fish and Boat Commission property along its northern boundary. Access is from the existing game lands.

The board also approved purchase of a 7.6-acre tract in Silver Spring Township, Cumberland County.

The property adjoins State Game Lands 170 and is being offered by the Central Pennsylvania Conservancy for an option price of $400 an acre to be paid with funds from the Game Fund. The tract is forested with hardwoods and has sassafras and witch-hazel in the understory.

TRACTS DONATED IN CAMBRIA, DAUPHIN COUNTIES

Donations to add more than 24 acres to game lands.

Two land donations approved today by the Pennsylvania Board of Game Commissioners will add more than 24 acres to the state game lands system.

The board approved a 14.2-acre donation in Jackson Township, Cambria County. The tract, which adjoins State Game Lands 79, is offered for donation by Charles Merlo III. The property mostly is forested with mixed hardwoods in early succession, and it has approximately 1.5 acres of reverting old fields. Access to the property is off U.S. Route 22.

The board also voted to accept the donation of about 10 acres in Williams Township, Dauphin County. The tract, which is located about 3,000 feet south of State Game Lands 264, is being offered by the Estate of Constance Garber. The property is forested with mixed hardwoods. Wiconisco Creek flows along the northern boundary. Access is from Water Street, which parallels the western boundary.

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