Landowners, Others Seeing the Impact of Energy Investment

by Garry Hoffmann  on Monday, Aug. 27, 2007 12:00 am  

New Money

Joe Whisenhunt goes a step further.

"The Fayetteville Shale Play will have the most significant impact that the state of Arkansas has ever had," Whisenhunt, 71, said from his home on Harmony Mountain in the Ozark foothills. "It's worth 15 to 20 auto plants."

The commercial real estate developer took an unconventional route in marketing the mineral rights to 4,000 acres he has accumulated on and around Harmony Meadows Ranch, primarily along U.S. 65 at Bee Branch and several miles east on the Greers Ferry Lake shoreline.

He first learned of the oil and gas industry's interest in the area about three years ago from a neighbor who asked if he had been approached. Soon he was hearing about signing bonuses of $600 to $700 an acre. After downloading a standard lease from the Web site of the Arkansas Oil & Gas Commission and paring the "onerous" language to the basic legal requirements, Whisenhunt decided to go proactive.

"I brought in a new company, fresh, and they started to work," he said.

Whisenhunt had gone to the Tulsa offices of KCS Resources, a company he knew was not involved in the Fayetteville Shale Play.

"We literally constructed our own lease, incorporating the legal requirements of the state of Arkansas," Whisenhunt said.

Conspicuously absent was a signing bonus. Whisenhunt wanted that money put into drilling - "they had a year to drill three wells" - but he received a royalty that he described as significantly different from the standard one-eighth share, or 12.5 percent. He said a confidentially agreement precluded him from disclosing the rate.

"Believe me, it's a good one."

Petrohawk Energy Corp., which absorbed KCS Resources, has since put eight wells in the pipeline on Whisenhunt land, producing, the landowner said, 21 million cubic feet per day. Three wells are in a section of land (640 acres) that includes a 110-acre subdivision of 32 property owners with plots of 1 to 4.5 acres. Whisenhunt said he had leased their land and then subleased it back to them with a royalty stake three times above the standard 12.5 percent.

That's where he draws the most satisfaction, Whisenhunt said, relating how a man in his 70s had shared his and his wife's excitement upon receiving their first royalty check: $700 for three months of drilling. Whisenhunt said he reminded the man that the check reflected only one well's production, that there were three in the section, and the payments would soon be $200 to $250 per month per well.



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