Energy companies are snapping up the rights to underground natural gas from scores of property owners in Lee County, where indications of a massive natural gas deposit recently surfaced.
The companies are offering upfront signing bonuses, plus future royalty payments if exploration discovers significant natural gas deposits trapped in prehistoric shale basins.
At least one company, Charlotte-based Tar Heel Natural Gas, is mailing out ready-to-sign contracts to property owners - along with ready-to-cash bonus checks - to encourage them to sign over their natural gas rights.
The WhitMar Exploration Co., based in Denver, had signed about 40 land leases as of mid-May, according to filings with the Lee County Register of Deeds. Other companies active in the area haven't yet filed papers and aren't saying how many property owners have signed with them.
The land rush is causing concern that property owners, strangers to the arcane field of energy exploration, could be exploited.
"There's several levels of concern," said Ted Feitshans, an extension specialist at N.C. State University's agricultural economics department. "One is they're not getting the level of payment they could get if they were skilled negotiators."
Other issues include contracts that would leave property owners legally responsible for the cleanup costs if an environmental accident on their land contaminated neighboring properties or drinking water.
Once a contract is signed, Feitshans said, "if it's a bad deal, the legal system won't save you."
Feitshans was one of several speakers this month at an informational session in Lee County before a packed auditorium of 250 people. Several dozen more who could not get in were put on a waiting list.
State geologists say the underground formations cover nearly 1,400 square miles and could supply the state with 40 years of natural gas. But how much natural gas exists won't be known until companies begin drilling.
It's not clear whether the energy companies will ever get to drill in this state. The two technologies required to extract natural gas from shale basins - horizontal drilling and hydraulic fracturing - are not permitted in North Carolina.
The energy companies are lining up property rights, however, in order to be ready to drill if the state law is changed. Residents say the energy companies have telephoned them, sent letters and knocked on their doors.
"You want to have a lease bloc together before you invest probably $2.5 million to drill a well," said Charles Roberts, founder and managing member of Old North State Energy Co., a Sanford company that's signing leases.
Roberts won't provide details on how many how many homeowners have signed leases with his company or how much it's paying the property owners.
Earlier this month, Tar Heel Oil & Gas was offering $3 per acre as a signing bonus and a 12.5 percent royalty on natural gas revenues, according to a package sent to a property owner. The company could not be reached for comment Friday.
Worth Pickard, a retiree who drilled water wells for 55 years, owns about 50 acres and said he signed for $2 per acre with WhitMar, giving the exploration company a 10-year lease on his land.
Susan Poe said she signed two deals with WhitMar for two separate parcels totaling about 500 acres.
"A week later another guy called," Poe said. "I didn't talk money with him. I told him he's a week late."
Peggy Wyatt said she reviewed the WhitMar contract with family members and felt confident it was a good deal. "I was very satisfied with the contract," she said. "And it did not cost me anything to sign it."
