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Lease agreements allowed to expire
YOUNGSTOWN
Many residents of northwest Trumbull County who signed a lease for their oil and gas rights with Shale Investment Fund are learning their agreements with the company were allowed to expire.
Shale Investment Fund has been making lease-purchasing agreements in Trumbull County for Halcon Resources Corp., a Houston-based energy company. Halcon has decided, based on some type of testing in the region, that it prefers the northeast and southwest portion of Trumbull County, said Jim Brumbaugh, president and CEO of Shale Investment Fund.
The company rushed to finish documents before contracts ran out within the area of mutual interest with Halcon, he said.
“The area of mutual interest has changed. When we first got the contract, the area of mutual interest included all of Trumbull County,” Brumbaugh said.
Shale Investment has 31 employees working to go through all the necessary land records in order to finalize contracts with deadlines upcoming, he said.
“Things are so backed up in the [Trumbull County] recorder’s office — what used to take 30 days is now taking 90,” Brumbaugh said.
Diana Marchese, Trumbull County recorder, said the delays are not coming from her office, but rather these land research companies going through other government agencies’ records besides the recorder’s office.
These other offices do not have the staff to complete all the requests, and there have been some delays, she said.
“All of our stuff is online. Companies can get all their records from anywhere,” Marchese said.
Marta Elliott of Bristol Township is one of the people who signed a lease with Shale Investment, but does not expect the deal to be completed.
“I called them three times and never heard any word,” she said.
Elliott signed her lease, and it was recorded in April. With two weeks until the deadline, she had still not received her bonus payment and began calling the company to see what happened, she said.
“When I couldn’t get an answer from them, I kind of figured something like this had happened,” Elliott said.
Her concern was if Halcon was no longer interested in Northwest Trumbull County, did that mean that no oil and gas companies would be interested in developing the area?
“I’ve had some talks with BP, but I told them I couldn’t do anything because I had already signed with Shale Investments,” she said. “Now I’ll have to go down to the recorder’s office and get a release from my agreement.”
Halcon had a goal of purchasing oil and gas leases for 200,000 acres of land in four counties: Trumbull County in Ohio and Crawford, Mercer and Venango counties in Pennsylvania.
The purchase by Halcon of 31,000 acres in Trumbull and Mahoning counties “went a long way toward helping them reach that goal,” Brumbaugh said.
Individuals who have their lease terms expire can come to the county recorder’s office for a release of the lease, Marchese said.
“I haven’t seen a large number of lease-release requests for [Northwest Trumbull County], but there have been a few county wide,” she said.
Thus far in 2012, Shale Investment Fund has formally surrendered rights to more than 1,400 acres of oil and gas leases in Trumbull County, according to recorder’s office records.
“This is something when the industry first started talking about moving here we were warned would happen,” Marchese said.
Officials were told that companies would review information about an area, purchase rights and then could change their decision just as quickly, she said. The key is that until the wells are drilled, there is no way to know what resources are available underground.
“If they don’t find what they’re looking for, these oil and gas companies could be gone just as quickly as they got here,” Marchese said.
This situation is one of the risks that people face when they sign the form leases presented by companies, said Alan Wenger, an attorney from Harrington, Hoppe and Mitchell, LTD.
Typically on negotiated leases, the only way a company can get out of the contract is if the property owner does not actually possess the mineral rights, he said.