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East Palestine weighs lease possibilities

December 4, 2011
By KATIE SCHWENDEMAN - Staff Writer ( , Morning Journal News

EAST PALESTINE - A Village Councilman believes an oil and gas lease agreement with an exploration company would reap more financial benefits if the village joins a group rather than lease land individually.

Don Elzer told council on Monday he spoke with other land owners in the community who have not yet signed lease agreements and said the village should consider teaming up with them to lease as a group.

Council member Charles McGuire suggested at the Nov. 14 meeting the village look into signing a lease agreement after reading a newspaper article that Wellsville is expecting to receive nearly $2 million from a lease it signed in early November with Chesapeake Energy.

The riverfront community leased more than 300 acres at $5,800 per acre and will also receive 20 percent royalties once drilling begins.

Wellsville signed a contract months after others had already done so and ended up with a better deal, McGuire said.

Salineville signed a lease in March for $1,900 per acre and United Local and Beaver Local school districts signed later for $2,000 and $2,250 per acre respectively.

East Palestine council has discussed leasing land at village park, which is about 135 acres, according to a park lands inventory Municipal Manager Gary Clark recently conducted.

Clark said the inventory doesn't include parcels within the water and sewer and cemetery departments.

McGuire isn't sure the village will benefit more from leasing as a group, but said it "makes sense to look."

"Most farmers in this area went as a group and they had 10,000 or 15,000 acres involved and only got $1,800 per acre. They went in early and didn't get as good of a deal as a group...but, sometimes with more property you may get a better deal," he said.

Law Director Shirley Smith cautioned there are certain clauses in group leases that shouldn't be overlooked.

For example, some leases may offer a substantial signing bonus, but royalty percentages are lower than leases signed individually.

"There are certain advantages to what you're talking about," she told Elzer, however.

She and Clark have and are continuing to look into the benefits of a lease agreement, she said previously.



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