The Herald, Sharon, Pa.

August 21, 2013

Cash gushes from drilling

City, school get first lease checks

By Joe Pinchot
Herald Staff Writer

HERMITAGE — A drilling company recently gave Hermitage city and school districts checks to lease public land.

The agencies agreed to lease land in December, but were waiting to see if HilCorp Energy ILP would pick up their options.

“We’re very happy to see that,” school Superintendent Dr. Daniel Bell said of the $202,875 check.

School officials have not decided what to do with the money, he said.

The city received $88,853, said City Manager Gary P. Hinkson.

“It was placed in a separate revenue fund that will contain revenues from various energy sources – gas well production, lease income and fees,” Hinkson said. “Future uses for that money are yet to be finalized but would probably be allocated on infrastructure improvements and recreation facilities. The board (of commissioners) has expressed interest in utilizing some of the money for work at the Stull farm.”

The city was paid $3,000 an acre, while the school district set more restrictions – no drilling or driving on the surface of school property – and was paid $2,500 an acre.

Hinkson said restrictions in the city lease based on the size of parcels and distance from structures effectively bans surface activity.

About 30 acres of city property is leased. City-owned land in LindenPointe technical business park was not part of the deal, and property subject to other leases or to which the city does not control the mineral rights, including the Stull farm on Sample Road, Whispering Pines Community Park on East State Street and the city garage on Virginia Road, also are not part of the HilCorp lease.

The school district leased more than 80 acres.

If HilCorp drills, the city and school would be paid a 17-percent royalty based on the gross value of the fossil fuel that comes up, and the leases would last as long as the well or wells produce.

If HilCorp does not drill within five years, the leases could be renewed.