MORRISTOWN - Larry Cain believes he can get a good deal for the 45,000 Utica shale acres his 600-member group is looking to lease to a gas and oil company.
"We feel we can get a better package than what is currently being offered in Belmont County," said Cain, chairman of the Smith-Goshen Landowners Group.
The group is so-named because 85-90 percent of the acreage lies within the Smith and Goshen townships, in the heart of Belmont County. Communities included in these townships are Bethesda, Belmont, Centerville, Jacobsburg, Lamira and Warnock. The remaining acreage is found in surrounding townships.
The collective - which Cain said will accept new members and additional acreage until one of the seven companies decides on how much acreage they want to acquire - allows the members to avoid having individuals come to their homes. He previously said XTO, Chesapeake Energy, Hess Corp., Gulfport Energy, Magnum Hunter Resources and Talisman Energy are among the companies which whom the group has held discussions on leasing the 45,000 acres.
"The interest will be even greater once the mining issues are resolved," Cain said, though not wanting to name the additional gas companies with which the group is negotiating.
Robert E. Murray is vice president of business development and external affairs for Murray Energy Corp., the parent company of American Energy Corp.'s Century Mine, Ohio Valley Coal Co.'s Powhatan No. 6 mine and OhioAmerican Energy Inc.'s Red Bird West mine. Regarding the interaction between coal mining operations and oil and gas drilling work, he recently told The Intelligencer, "The two industries have co-existed for years and will continue to do so."
Another group of Belmont County landowners signed Utica deals with Exxon Mobil subsidiary XTO Energy in September. The terms of this contract called for the owners to receive $4,950 per acre on lease payments and 19 percent on production royalties once gas starts flowing from the property.
Cain did not want to discuss the exact monetary terms his group of about 600 property owners is seeking. However, even at a minimum of $5,000 per acre, 45,000 acres would yield $225 million in lease payments for the Belmont County owners.
This would break down to an average payment of $375,000 to each owner, though this amount would vary significantly based on the amount of acreage the individual owner is contributing to the group.
Noting that most of the mineral owners also own the surface on top of the Utica shale, Cain said the owners want a lease that will guarantee protection of their farms and water supplies.
"We are not operating on any specific timetable," he said. "We will continue to work to get the best deal for our members."
Some believe the Utica shale underneath much of eastern Ohio may ultimately prove even more valuable than the Marcellus shale beneath Pennsylvania and West Virginia. This is because, analysts say, the Utica contains more ethane, propane, butane and pentane than the Marcellus, and may hold significant amounts of oil.