Article originally provided by The Weekly Almanac

March 13, 2008

Gas lease strategies being developed

James B. Kilgore

The gym was packed, the bleachers full and metal chairs spread out on the shiny wood floor.

More than 300 Wayne County landowners came to watch a legal team of three dribble and toss words and legal concepts to the crowd mesmerized by the gas leasing frenzy that has enveloped northern Wayne County.

The legal team hired by members of the Northern Wayne Property Owners Alliance (NWPOA), a gas leasing group of Wayne County landowners, met with NWPOA for the first time for more than two hours on the evening of March 5 at the Damascus School.

The group’s attorneys C. Baird Brown and David Mandelbaum from Philadelphia law firm Ballard, Spahr, Andrews and Ingersoll LLP were joined by legal team member Peter Hosey, of Texas law firm Jackson Walker. The high-powered legal team was hired by NWPOA to represent the group in the process of bidding out the acreage of NWPOA members in leasing the land for the drilling of gas.

The intent of NWPOA, a northern Wayne landowner group representing some 50,000 acres, is to obtain the best economic package and lease terms from an energy company along with protections for the land, water and the environment.

The NWPOA legal team will draw up a bid package called a request for proposal and send it to selected energy companies who, in turn, will bid on the properties. All bidders must meet certain minimum standards established by NWPOA and its legal team. Such bidders, according to NWPOA legal team member C. Baird Brown, will be qualified through a request for qualifications document which will determine if a potential bidder is financially qualified, has adequate drilling experience in Pennsylvania, is sensitive to the environment, has a history of regulatory and environmental compliance and has an adequate plan and track record for the whole drilling and production process to include well fracking and an acceptable water use plan.

Qualified bidders will then be asked to bid on a draft lease prepared by NWPOA and its legal team to include terms and conditions to maximize the economic package (to include signing bonus, royalties and other financial benefits) along with certain NWPOA mandated protections to the land, water, environment, buildings and other personal property. NWPOA will continue to exist after the bid process and have oversight of drilling and environmental compliance.

”NWPOA will act as the property owner’s representative and can enforce the environmental covenants for all members,” said attorney Brown. Financing of the NWPOA oversight will come from funds provided by the successful bidder.

At least nine energy companies have already expressed initial interest in NWPOA landholdings, according to NWPOA Executive Director Marian Schweighofer, who with her husband, Ed, owns a large dairy farm and plant nursery business in Damascus.

NWPOA plans to complete the gas lease bid process by mid-April.