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Sierra Buckeye official says company did not default on lease

FPS staff report

Officials from Sierra Buckeye are rebutting a statement by Carroll County Commissioners saying they “defaulted on an oil and gas lease.”

Robert S. Fabris, vice president, Land and Business Development, for Sierra Buckeye, LLC, said in a statement emailed to The Free Press Standard (FPS) Aug. 23, his company “elected to release a paid-up oil and gas lease originally dated July 17, 2012, for the Atwood Lodge property.”

During the Aug. 19 meeting, commissioners met in executive session with Prosecuting Attorney Donald Burns for nearly two hours to discuss contract negotiations. After that meeting, they returned to regular session and approved a motion “to pursue the oil and gas lease with Sierra Buckeye: to put the lessee on notice of default of the agreement in accordance with Article II, Paragraph 10.”

Commissioners received the initial bonus payment of $4,500 per acre for nearly 500 acres that was to be paid within 90 days of the contract signing Nov. 2, 2012. Commissioners said an additional $1,500 per acre bonus payment was due them if a well was not drilled within 180 days of the bonus payment unless Sierra Buckeye canceled the lease.

During the first week of May 2013, commissioners agreed to a 60-day extension requested by Sierra Buckeye for payment of the second bonus payment.

Fabris said Sierra requested an extension of the lease until Nov. 1, 2013, so it can further assess the economic viability of the Utica Shale window.

“However, despite repeated requests, the Carroll County Board of Commissioners failed to notify Sierra of its decision to not extend the lease,” Fabris said. “Instead Sierra learned of the decision by reading news articles. In these articles the Carroll County Board of Commissioners erroneously informed the public that Sierra Buckeye was in ‘default’ during a meeting Aug. 19.”

He said this was certainly not the case as Sierra Buckeye was able to release the lease because the language in the lease provided that if Sierra did not commence an optional well or make an optional payment of $1,500 per acre, then the lease would terminate June 30, 2013.

He said company officials executed a release Aug. 22, which was sent by overnight mail to county commissioners so it could be recorded in the Carroll County Recorders office.

The FPS attempted to contact county commissioners for comment Friday morning, but none of the three men were in the office.

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