- PDF Versions
Residents sign revised oil and gas leases, hope dividends will flow from fracking
About 300 residents packed into the Market at East State Street Thursday to learn more about Cunningham Energy’s new oil and gas lease and possibly sign the agreement.
The new lease was negotiated through Athens attorney and resident John Lavelle after the first batch of leases became void because Cunningham failed to make payments to lessors in March.
The meeting was an opportunity for lessors of the previous agreement and new lessors to ask Lavelle and representatives from Cunningham questions about the new lease terms, Lavelle said, who signed the lease for his own land.
“We might have good oil down here, we might not,” said Lavelle. “We really won’t know until we drill.”
According to the new lease, Cunningham will build five vertical test wells throughout Athens County to test the viability of drilling in the area. If the wells find there is enough gas to make drilling economic, then the company could bring hydraulic fracturing to the area.
In addition, the new agreement has higher payouts on the back end, while the previous lease had been more frontloaded.
“To get a risk partner, you have to make the entry fee attractive enough that someone’s going to take the risk, and hopefully we’ll get the same amount (of payouts) in the long wrong.”
He added that the largest benefits of the lease would be from the 16.5 percent royalty that the lessor will receive if the vertical test wells start producing.
Lavelle urged lessors who had signed Cunningham’s previous lease to sign the new lease at the meeting, as their old lease expires Friday.
Stan Molnar, who signed Cunningham’s previous lease but did not sign at Thursday’s meeting, said he was scared away by the short notice.
“When Lavelle said, ‘You have to sign tonight,’ it sounded like I was at a car dealership.”
A number of people did not hesitate to approach tables at the front of the room to sign the new lease agreement. Representatives from Cunningham were available to answer questions and assist in the signing.
A representative from Cunningham, who declined to give his name, said the number of people who signed is about what the company expected.
Tom Bidwell, a Madison County resident who owns land in Vinton County, said he signed the lease because a friend had talked him into it.
“It sounded like a good deal, so I went ahead and signed it,” Bidwell said.