Drilling Offers Spike: Payments Reach $4,000
Per Acre

BY: CASEY JUNKINS

Aug 29, 2010 — WHEELING, WEST VIRGINIA, USA (INTELLIGENCER) — Natural gas lease payments have hit $4,000 per acre in Ohio County, as NPAR LLC is offering that amount for land in the Stone Church Road area, the Sunday News-Register has learned. NPAR's offer trumps the previous highest known local payment of $3,600 per acre that Chesapeake Energy paid the Ohio County Commission earlier this year to lease land for Marcellus Shale drilling at The Highlands and other areas.

A copy of an unsigned gas lease dated for Aug. 1 obtained by the Sunday News-Register shows that NPAR LLC is offering the $4,000 for every acre, along with 18 percent returns on production royalties. NPAR is a subsidiary of Brecksville, Ohio-based AB Resources Inc.

Matt Padden, who has represented the natural gas interests of roughly 400 local landowners controlling about 26,000 acres in Ohio, Marshall and Brooke counties, as well as western Pennsylvania, said some group members recently left to sign letters of intent with NPAR.

"To my knowledge, that is what they were offered by NPAR," Padden said of the lease. AB Resources Chief Executive Officer Gordon Yonel said via e-mail, "It is not our company's policy to respond to, or engage with the media regarding our commercial activities and market movements."

Several local property owners have signed with AB Resources, including the New Vrindaban Hare Krishna Community in Marshall County. The community is gaining $2,500 per acre in lease revenue for about 4,000 acres and 18.75 percent in production royalties.

AB Resources also holds the permit for the Marshall County well site that exploded when workers encountered a pocket of methane gas in an abandoned coal mine on June 7. AB Resources hired Chief Oil and Gas Co. of Wexford, Pa. to drill the well. In addition to injuring several workers, the charge ignited a large fireball that could be seen miles away. Following a full suspension of the company's operations following the explosion, the West Virginia Department of Environmental Protection recently allowed AB Resources to resume drilling.

Group Dealings

Despite the loss of a few members to NPAR, Padden believes his coalition, known as the Ohio and Surrounding Counties of West Virginia Landowners Group, retains a strong position to sign profitable drilling deals. Most of the Ohio County land lies in rural areas in the vicinity of West Liberty and Triadelphia.

Padden said the group received an offer of $3,000 per acre in lease payments, with 18 percent production royalties, from Chesapeake earlier this year. The group has not accepted the offer, as Padden believes the property may be worth as much as $5,000 per acre.

Stacey Brodak, director of corporate development for Chesapeake, previously noted her company also keeps its deals with private landowners "confidential." Though Padden said most of the group's members "would prefer to sign sooner," he noted there is no specific time frame for finalizing a drilling deal.

"We are biding our time until the right contract at the right time shows up," he said. "We will wait as long as it takes."

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