Chesapeake Pays $9M to Lease 1,500 Utica Acres
YOUNGSTOWN, Ohio – An affiliate of Chesapeake Energy Corp. is paying a Kentucky coal company $9 million dollars to lease drilling rights in the Utica shale region of Harrison County.
Rhino Resource Partners LP, based in Lexington, Ky., says its lease agreement with Chesapeake Exploration LLC covers an estimated 1,500 acres the partnership owns in Harrison County. The lease agreement is for a five-year term with an optional three-year renewal period and conveys rights to Chesapeake to perform drilling and operating activities for producing oil, natural gas or other hydrocarbons. As part of the lease agreement, according to an announcement from Rhino, Chesapeake agreed to pay $6,000 per acre as a lease bonus, or an estimated total of $9 million, of which $500,000 was paid at the signing of the agreement. The remainder of the lpayment shall be paid by Chesapeake within 90 days, subject to title verification of the acreage by Chesapeake. In addition, the lease agreement stipulates that Chesapeake shall pay the Rhino partnership a 20% royalty based upon the gross proceeds received from the sale of oil and natural gas recovered from the property.
Said Dave Zatezalo, CEO of Rhino's general partner, "We are pleased that our diversification efforts with a particular focus on oil and gas have begun to yield results in the form of this $9 million lease bonus. We believe our holdings in the play will provide attractive returns to the partnership, and in addition, we are actively looking for additional ways to generate cash flow from the development of the Utica."
Rhino Resource Partners LP is a growth-oriented limited partnership. Rhino produces metallurgical and steam coal in a variety of basins throughout the United States, and it owns oil and gas acreage in the Utica and Cana Woodford plays.
Rhino's general partner, Rhino GP LLC, is an affiliate of Wexford Capital LP, which has more than $5.6 billion of assets under management.
Published by The Business Journal, Youngstown, Ohio.