By Joe Pinchot
Herald Staff Writer
Hermitage School Board approved a lease for oil and gas drilling Monday, signaling its intention to allow a Houston company to drill under district property.
It’s now up to HilCorp Energy ILP to decide if it wants to sign the lease, said district solicitor Roger R. Shaffer Jr.
Although HilCorp, which was represented in negotiations by Western Land Services, pushed school officials to sign the lease by Wednesday, the company has 90 days do property title searches, conduct testing and otherwise study the possibility of drilling.
“The board should look at this as almost an option on their (HilCorp’s) part,” Shaffer said. “They are not bound by this.”
Should the lease be consummated, HilCorp would have the right to drill under district property, but would not be allowed to drill, drive or install pipe on it.
“They are not allowed to turn a truck around on our property,” said Superintendent Dr. Daniel Bell. “We will not see any disruption of any school activities.”
If HilCorp signs the lease, it must pay the district $2,500 an acre for the 80.89 acres of school property, $202,225.
If HilCorp drills and takes gas from school property, it would pay the district a 17-percent royalty based on the gross value of the product. The value will fluctuate according to the market.
The lease would be good for five years and has a renewal option by mutual agreement for another five years that would require a second $202,255 payment to the district.
If any drilling takes place and the well produces, the lease would be in effect as long as the well produces.
School board member Robert Mancino asked officials if there will be protesters.
Bell responded that there has been some concerns in other school districts, but no one has expressed a concern to him.
“That’s a long way of saying I don’t know the answer to your question,” Bell said.
City officials also have talked with Western Land Services about a lease with HilCorp and commissioners met with a representative in September, but an ordinance to approve a lease has not been introduced.