Harrington, Hoppe & Mitchell lawyer looks at oil, gas leases

May 4, 2016 at 12:00a.m.

YOUNGSTOWN

A lot has changed in five years with the oil and gas industry here.

Back in 2010, the Mahoning Valley was just starting to see a trickle of landmen from oil and gas companies grabbing up land leases.

Now, the Harrington, Hoppe & Mitchell law firm has been getting calls from landowners wondering what to do with the expiring leases.

“A lot of folks I know have contacted the lessee and asked, ‘Don’t you want to renew?’ And often they don’t hear anything back,” said Alan D. Wenger, chairman of the oil and gas law practice group at Harrington, Hoppe & Mitchell.

Renewal of the leases is a rarity in Mahoning and Trumbull counties.

Columbiana County, which is closer to the southern counties where oil and gas development took off in the last few years, has had some lease renewals, Wenger said.

The price of a barrel of oil has dropped from more than $100 in June 2014 down to $44.78 a barrel reported by the U.S. Energy Information Administration on May 2. The natural-gas futures price as of May 2 was $2.042 per million British thermal units, a drop of $0.734 from a year ago, according to the EIA.

At its peak, the state had 59 rigs and now has 11.

Some landowners like to think that if they ride out the current downturn, the industry the market will come back.

Wenger, who recently sent a memo to lease holders, advises those with expiring leases to take the initiative to have the lease released.

The lease could restrict the owner’s ability to sell or mortgage the property. Or, if a developer is interested in the oil and gas rights, negotiations could be easier if the lease is out of the way.