Tag Archives: leases

Cunningham Energy seeks to postpone lease bonus payments, attorney says

Posted: Sunday, March 11, 2012 5:56 pm | Updated: 7:16 am, Mon Mar 12, 2012.

By STEVE ROBB Messenger staff journalist

It is “very unlikely” that Cunningham Energy will be able to meet Thursday’s deadline for making lease bonus payments to Athens County landowners, but the company is seeking a time extension, according to an attorney who has negotiated oil and gas leases for hundreds of local property owners.

Attorney John Lavelle sent his clients a letter Friday updating them on the situation. Contacted Saturday by The Messenger, Lavelle declined to comment. However, The Messenger obtained a copy of the letter from a landowner.

Lavelle has said previously that he has negotiated about 500 leases with Cunningham for local property owners that include signing bonuses of $2,500 per acre for drill leases and $1,250 per acre for non-drill leases. Lavelle has said the bonuses for his clients total more than $100 million. Payment of the bonuses by this Thursday was required in order for the leases to take effect. The leases also call for payment of a 16 percent royalty.

“It is very unlikely the leases will be funded by March 15, 2012. The agreements will therefore expire by their own terms,” Lavelle writes in the Friday letter.

However, Lavelle also writes that Cunningham has presented the lease package to more than 130 “of the largest companies in the world” and is currently in “intense negotiations” with a joint venture partner which are expected to result in a purchase and sale agreement within the next seven to 10 days, with a closing within 45-60 days thereafter.

At a lease signing event last November at the Athens County Fairgrounds, Cunningham land manager Joseph Blackhurst said his company has only conducted vertical drilling in the past and that a joint venture partner working with Cunningham would be the one doing any horizontal drilling.

At the time, Blackhurst would not disclose the name of the joint venture partner, but said it is a well-known publicly traded company.

Lavelle’s letter, though, indicates that an agreement has not yet been reached with a partner.

Lavelle says in the letter that he was approached about extending all the lease agreements to May 18.

“I explained it would be a daunting task to secure the consent of over 500 lessors in a short time frame, but we would do everything possible to extend this opportunity to those who desire to participate,” Lavelle writes.

In exchange for the time extension, Cunningham has agreed to increase the 16 percent royalty to 16.5 percent, according to the letter.

Lavelle also provided his client with an amendment, developed by a Cunningham attorney, to extend Thursday’s deadline to May 18. The letter instructs the clients to return the signed document by Thursday in order to continue to be part of the lease proposal.

According to an affidavit that Blackhurst filed in the Athens County Recorder’s Office last December, Lavelle has a lease agreement with Cunningham for 362 acres of his own property.

“My wife and I plan to sign the amendment concerning our own acreage,” Lavelle says in Friday’s letter. “We play to stay with it until the conclusion.”

Link to Original Article: http://www.athensohiotoday.com/news/article_163c4ff4-6bc5-11e1-bfa8-001871e3ce6c.html

New York Times Analyzes More Than 110,000 Landowner Leases & Creates Searchable Database

In the latest article of the “Drilling Down Series” Ian Urbina and Jo Craven McGinty from the New York Times have worked to collect and analyze trends in 110,000 landowner oil and gas leases from 6 states. They have written the following article that documents some of the trends they have found including interviews with landowners  that describe difficulties some are finding in implementing agreements in leases. It is an important read for anyone considering a lease:

http://www.nytimes.com/2011/12/02/us/drilling-down-fighting-over-oil-and-gas-well-leases.html?hpw

There is also a searchable archive of over 110,000 leases and related documents, with explanations of some key legal terminology that you can find here including approximately 1,200 leases from Ohio:

http://www.nytimes.com/interactive/2011/12/02/us/oil-and-gas-leases.html?ref=us

Note from Times: There are more than 8 million oil and gas leases in the United States. This collection only contains leases, addenda and other documents from counties that digitized their records and that were willing to provide them. The Times collected the leases and other related documents, signed between 2007 and 2011, because many leasing experts said that they lacked an ability to review a diversity of leases to compare terms. A research team from the Emmett Environmental Law and Policy Clinic at Harvard Law School assisted the Times in analyzing some of the legal language.