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Texas company pays $194M for drilling rights in Trumbull, Mahoning counties



Published: Fri, August 3, 2012 @ 12:09 a.m.

Halcon Resources Corp. invests in leases involving 31,000 acres in Trumbull and Mahoning countiesSFlb

By Burton Speakman

bspeakman@vindy.com

YOUNGSTOWN

A Houston-based energy company is spending $194 million to gain Utica Shale drilling rights to 31,000 acres in Trumbull and Mahoning counties for oil and gas development.

Halcon Resources Corp. becomes the third company to make a significant economic investment into leases in Trumbull County in 2012. The company agreed to pay more than $6,000 an acre for the oil and gas rights. They were purchased from another Texas company, NCL Appalachian Partners, L.P., of The Woodlands, Texas.

There are no proven reserves of oil or natural gas on the property involved in the sale, according to the United States Securities and Exchange Commission filing regarding the purchase.

Halcon’s purchase in Trumbull County was preceded by BP’s leasing more than 80,000 acres and Chesapeake Energy with more than 25,000 acres.

The Halcon agreement also includes the purchase of oil and gas rights for about 3,000 acres of land in Mahoning County, according to records in the Mahoning County Recorder’s Office. The majority of the Mahoning County leases were in Jackson and Milton townships.

The amount paid by Halcon for the local acreage was much higher than most of the other reassignments of leases that have occurred locally, said Alan Wenger, an attorney at Harrington, Hoppe & Mitchell in Youngstown, who has negotiated oil and gas leases for the Associated Landowners of the Ohio Valley in Trumbull County. “Typically they’ve been in the range of $1,000 to $2,000 an acre, but the companies also typically get a point or two of royalties [which did not occur in this transaction],” he said.

The leases involved in this sale are mostly older leases from the 1960s, ’70s and ’80s in the Lordstown area on both sides of the county line. There are potential problems that could arise because of the age of the leases and the provisions they contain, Wenger said.

“It appears there is a lack of attention being paid to these older leases,” he said. “I have looked at a few, and there appear to be issues with unit size and consent to assign issues.” Some of these older leases contained provisions that required the surface owner to consent to the lease’s being reassigned. The older leases also contained smaller drilling areas than those used in the horizontal fracturing process, Wenger said.

These issues probably provide the surface landowners with some rights. Each of the leases may be different, and horizontal wells differ greatly from traditional vertical wells, Wenger said.

There have been a number of issues with these old leases in Columbiana and other counties, Wenger said.

“Those same problems are probably going to happen in Trumbull County as well,” he said.

NCL Appalachian Partners retained Scotia Waterous (USA) Inc. to sell the Trumbull and Mahoning County land, according to the Unconventional Oil and Gas Center.

The ad for the property stated the properties are “within the wet gas/liquids-rich window of the Utica Shale and feature an average 82.5 percent net revenue interest” in about 30,000 gross acres in Mahoning and Trumbull counties.

Floyd C. Wilson, chairman and chief executive officer, stated in Halcon’s second-quarter statement, “We have made significant strides towards our goal of building a liquids-rich asset base with substantial drilling inventory. The transition from the leasehold acquisition phase to the drilling phase has begun. We will be in a position to discuss additional well results from all of our activities in the coming months.”

Halcon is an oil and gas development company that has holdings in Texas, Oklahoma and North Dakota shale formations.

The agreement between the two companies included a “no press release” clause, which means the two companies agreed not to release any information about the transaction that was not required by law, according to the sale agreement.

Neither Halcon nor NCL Appalachian Partners could be reached to comment.


Comments

1UticaShale(854 comments)posted 2 years, 3 months ago

And our unqualified leaders of Youngstown sit and do nothing as the water runs under the bridge. Go to Mahoning GIS and type in Youngstown Reutilization and see all the parcels of acreage that under law is suppose to be offered to the PEOPLE to develop, notice all parcels are and have been exempt from property taxes. Schools are not seeing any revenue from the City and many of these lands have produced ZERO taxes for decades; all these acres can be sold to the private sector and taxes will and can be paid by the wet gas underneath us all. But again our inept leaders have no clue what to do as Youngstown continues to be the third world City that it is.

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2Thunderboom(67 comments)posted 2 years, 3 months ago

Even David Copperfield would stand in awe if he could see how fast the government "officials" make $194 million disappear, with very little to show.

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3southsidedave(4807 comments)posted 2 years, 3 months ago

Big money, big problems...stay tuned...

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4Coffeecupguy(5 comments)posted 2 years, 2 months ago

Uticashale,,AMEN Go Demcrates Go!!!!! Big money Big Problems???? Big money = better standard of living, I hope the cost of living around here sky rockets, it will flush alot of the crap down the old crapper, the none working people wont be able to afford to live here, ahhhh what a great day!

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5cambridge(3049 comments)posted 2 years, 2 months ago

coffeecupguy.....don't the oil and gas shills like you and utica talk to each other enough at your "how to BS" training sessions, you have to suck up to each other on this board too? Oh I know, it's part of the training.

Don't get any on you.

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