Chesapeake Energy now controls 156 gas drilling leases in Ohio County previously owned by Range Resources. Some confusion has been generated regarding rights and ownership in this shuffle; this confusion has led to a lawsuit by Ohio County resident Melvin Kahle, a former U.S. Attorney for the Northern District of West Virginia, against Chesapeake. Kahle claims that Range abandoned the 2006 lease he had signed with that company operating as Great Lakes Energy Partners. The terms were $8.75 per acre for 200 acres plus a 14% production royalty on any gas extracted from his land. Kahle received a letter from Range dated Aug. 20, 2010 that stated, ”The purpose of this letter is to advise you that we are not accepting any new leases in your area at this time and are consequently returning your lease to you. This letter also confirms that there are no contractual or legal obligations between Range … on the one hand, and you on the other hand, and you may pursue other lease offers with other gas producers as you please.” Thus Kahle was surprised in October when subcontractors hired by Chesapeake showed up to conduct seismic testing on his land.
Range sold a package of leases to Chesapeake in an agreement dated August 16, 2010 and retroactive to July 1, 2010. Although the matter has not been legally resolved, the WVDEP Office of Oil and Gas issued a drilling permit to Chesapeake on February 11 to drill on Kahle’s land. The permit had been requested in December, 2010 and Kahle sent a letter to WVDEP stating his objection. The WVDEP website refects Kahle’s letter of objection as “Surface owner comment received. “Surface objection resolved” was noted on the WVDEP record with the issuance of the permit.
Today leases in Ohio County are commanding $3,000-$5,000 per acre and 18-20% production royalties.
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