Pennsylvania Board of Game Commissioners Approves Oil/Gas Agreement In Washington County; Board Approves Oil/Gas Agreement In Lawrence County; Board Approves Surface Support Lease Extension; Board Approves Oil/Gas Lease Amendment In Greene County; Board Approves Restricted Surface Oil/Gas Agreement

HARRISBURG, Pa., Jan. 30, 2013 /PRNewswire-USNewswire/ -- The Pennsylvania Board of Game Commissioners today approved an oil and gas agreement involving State Game Land (SGL) 232 in Washington County.

Under the agreement, the Game Commission has offered its oil and gas ownership under 1,201.33 acres of SGL 232 in Donegal and Independence townships, Washington County, for non-surface use oil and gas development by a competitive royalty bid. The offering was announced for competitive royalty bid in October, with a one-time bonus/rental payment of $2,500 per acre for a one year paid up primary term agreement. The minimum royalty was set at 18 percent for all oil, gas, and condensate produced and sold from under the premises.

Oil and gas development will be regulated by the Department of Environmental Protection's Oil and Gas Regulations and the Game Commission's Standard Restricted Surface Use Oil and Gas Cooperative Agreement.

The bonus payment of $3,003,325 will be deposited into the Game Fund or an interest bearing escrow account for the future purchase of wildlife habitats, lands, or other uses incidental to hunting, furtaking and wildlife resource management.

Bids were opened on Nov. 2, with Chesapeake Appalachia, L.L.C. of Oklahoma City, Oklahoma, submitting the highest royalty bid of 23.25 percent of the value of oil, gas, and condensate produced and sold from under the premises.

The other bidder, Range Resources, offered a 20 percent royalty bid.

BOARD APPROVES OIL/GAS AGREEMENT IN LAWRENCE COUNTY

The Pennsylvania Board of Game Commissioners today approved a restricted surface use oil and gas cooperative agreement involving State Game Land 150, Lawrence County.

Under the terms of the agreement, the agency offered its oil and gas ownership under two separate tracts totaling 586.007 acres of SGL 150 in Pulaski Township, Lawrence County, for non-surface use oil and gas development by a competitive royalty bid. The offering was announced for competitive royalty bid in October, with a one-time bonus/rental payment of $3,250 per acre for a five-year paid up agreement, and a minimum bid of 20 percent royalty.

Oil and gas development will be regulated by the Department of Environmental Protection's Oil and Gas Regulations and the Game Commission's Standard Restricted Surface Use Oil and Gas Cooperative Agreement.

The bonus payment of $1,904,522.75 will be deposited into the Game Fund or an interest bearing escrow account for the future purchase of wildlife habitats, lands, or other uses incidental to hunting, furtaking and wildlife resource management.

Bids for this tract were opened on Nov. 8, with Hilcorp Energy Company, of Houston, Texas, submitting the only bid, which matched the minimum royalty bid of 20 percent of the value of oil, gas, and condensate produced and sold from under the premises.

"Given the small size of these two separate tracts and the privately-held leases adjacent to game lands, our staff recognized the potential loss of a significant amount of oil/gas revenue if we did not react in a prudent and environmentally-conscientious manner," said Bill Capouillez, Director of Wildlife Habitat Management. "By way of this bid process, we can now facilitate a restricted surface-use lease and we can maximize our ability to protect and manage our natural resources to the full benefit of all sportsmen and wildlife."

BOARD APPROVES SURFACE SUPPORT LEASE EXTENSION

The Pennsylvania Board of Game Commissioners today approved a surface support lease extension involving State Game Land 79 in Cambria County.

Rosebud Mining Company (Rosebud) of Kittanning, Armstrong County, requested an extension of its existing underground mining agreement with the Game Commission for an additional five-year period to continue underground coal mine operations and remove an estimated 700,000 tons of remaining coal reserves.

All terms and conditions of the original lease remain the same and underground mining operations will continue with all rights as previously granted. There will be no additional surface impacts to SGL 79.

The Game Commission and Martin L. Bearer, t/d/b/a North Cambria Fuel Company consummated a 15-year lease agreement, dated March 3, 1998. The lease was transferred to Rosebud Mining Company on Oct. 14, 2009. The existing lease will expire on March 3, 2013; however, Rosebud estimates that underground mining activities will continue for another three to five years and, therefore, requested a five-year extension to the lease with an amended expiration date of March 3, 2018.

Mining will be regulated by the Department of Environmental Protection's Mining Regulations and the Game Commission's existing lease agreement. In addition, the lease includes a wildlife habitat reclamation and revegetation plan developed by the local Land Management Group Supervisor.

BOARD APPROVES OIL/GAS LEASE AMENDMENT IN GREENE COUNTY

The Pennsylvania Board of Game Commissioners today approved an oil and gas lease amendment involving State Game Land 223 in Greene County.

Chevron Appalachia, LLC, requested an amendment to its existing oil and gas lease with the Game Commission on SGL 223 in Dunkard Township, Greene County. The proposed amendment would add an additional 33.983 acres to the agreement. The Game Commission owns the surface and 50 percent of the underlying oil and gas rights. Chevron has leased the privately-owned oil and gas rights and has agreed to non-surface use on this portion of the game land.

The terms and conditions of the lease will remain consistent with the existing agreement, approved by the Game Commission in April of 2008, except the bonus payment will be increased from $125 per acre to $1,500 per acre for the amended acreage. The bonus payment will be deposited into the Game Fund or an interest bearing escrow account for the future purchase of wildlife habitats, lands, or other uses incidental to hunting, furtaking and wildlife resource management.

Oil and gas development will be regulated by the Department of Environmental Protection's Oil and Gas Regulations and the Game Commission's existing Oil/Gas Lease Agreement, which currently is in place.

BOARD APPROVES RESTRICTED SURFACE OIL/GAS AGREEMENT

The Pennsylvania Board of Game Commissioners today approved a restricted surface use oil and gas cooperative agreement involving a portion of State Game Land 75 in McHenry and Pine townships, Lycoming County

Pennsylvania General Energy (PGE) Company, L.L.C., of Warren, requested the Game Commission offer its oil and gas ownership under an about 11,900-acre portion of SGL 75 for oil and gas development.

PGE currently is developing oil and gas rights on the state forest tracts south of the proposed tract and has infrastructure in place, including water and gas pipelines that will ease the surface burden of developing the SGL acreage.

In exchange for the oil and gas agreement, PGE will convey to the Game Commission a 6,200 acre tract of land, known as the Kinzua Tract, adjacent to SGL 62 in Keating Township, McKean County.

The primary term of the agreement is for 10 years, with a five-year provision for drilling the first well. If PGE does not meet its drilling commitment, the Game Commission may request the surrender of the 1,836 acre western portion of the tract at the end of the 10 years. The initial royalty rate for each well will be set at 18 percent, and will increase to 21 percent once payout costs are met.

The agreement also provides PGE with the right to utilize the surface of SGL 75 for drilling pads, access roads and pipelines to transport Game Commission-owned gas reserves at locations approved by the agency. PGE will adhere to the reclamation and revegetation requirements as specified by the agreement and Department of Environmental Protection's (DEP) regulations.

PGE also has agreed to meet annually to discuss development and to solicit input and suggestions to protect wildlife and wildlife habitat.

Oil and gas development will be regulated by DEP's Oil and Gas Regulations, the Game Commission's Standard Restricted Surface Use Oil and Gas Development Agreement protection provisions and a $50,000 performance bond. The agreement will include the Game Commission's standard wildlife and environmental protection measures.

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SOURCE Pennsylvania Game Commission