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Judge Voids 21,000 Acres of Leases

Exxon subsidiary got drilling rights from Beck in 2011

February 16, 2013
By CASEY JUNKINS - Staff Writer , The Intelligencer / Wheeling News-Register

WOODSFIELD - Pending a court appeal, about 21,000 acres worth of Monroe County leases assigned to oil and natural giant Exxon Mobil in late 2011 are now invalid.

"All these people want is the right to lease their property for a reasonable rate," said Jim Peters, attorney for the Monroe County landowners. "These leases were signed for amounts as low as $50 per acre. The going rate around here now is about $6,000 per acre."

Most of the Monroe County leases were originally signed from 2001 to 2006, with the oldest dating back to 1989. The majority of them feature acreage in the townships of Benton, Center, Jackson, Perry and Wayne. Documents filed in the Monroe County Recorder's Office on Dec. 21, 2011, show that Ravenna, Ohio-based Beck Energy Corp. assigned multiple leases to Texas-based Exxon and the company's subsidiary, XTO Energy.

Article Photos

Photo by Casey Junkins
Abstractors crowd into the county recorder’s office in Belmont County in search of more land to lease for oil and gas exploration.

However, court documents show that many of the landowners then under contract with Beck already had filed suit against the company - before the Beck assigned the leases to XTO. Washington County Common Pleas Judge Edward Lane, on assignment to the Monroe County Court of Common Pleas in this case, has ruled the Beck leases invalid.

Lane said the leases "clearly, unequivocally and seriously offend public policy." He also cited a failure for drilling to commence on the land in a timely manner as a reason for voiding the leases.

Lane also states of the agreement between Beck and XTO that "Beck may potentially pull $70 million to $80 million in up-front money out of Monroe County alone, while the landowners of the county receive nothing."

The case is now under appeal to the Ohio Seventh District Court of Appeals. XTO produces more natural gas than any other company in the U.S.

"The court cannot imagine why these landowners would not wish to obtain thousands of dollars per acre for their property in up-front money, and potentially hundreds of thousands of dollars in royalties, versus the present arrangement with Beck Energy, wherein they are receiving a few dollars per acre per year and no royalties whatsoever," Lane added.

Beck officials could not be reached for comment, nor could company attorney Scott Zurakowski.

"As this matter is subject to legal proceedings, we decline to comment," said Exxon spokesman David Eglinton.

Jeffrey Neu, public and government affairs adviser for XTO, could not be reached for comment. However, he previously addressed the Monroe County situation.

"XTO has a leasehold in the area and are in the process of evaluating this acreage to determine its value. We continuously evaluate and pursue potentially attractive opportunities in all regions of the United States to optimize the corporation's portfolio," he said.

In addition to taking over the Beck leases, files in the Belmont County Recorder's Office show XTO signed a slew of property owners to new leases in the past two years. Many of these owners signed to receive lease payments of $4,950 per acres with 19 percent payments on production royalties, including the Union Local Board of Education and Martins Ferry Board of Education. The company also controls the leases local residents may have previously signed with Phillips Exploration.

 
 

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