Organizers of the North Benbrook Neighborhood Association saw something they didn't like when Paloma Resources agreed Jan. 9 to sell leases to Chesapeake Energy and go to work as an agent for the company: the loss of a competitor in the Barnett Shale neighborhood leasing game.
The next day, HTP and Associates, which had been offering to sign leases in North Benbrook for Paloma, contacted the neighborhood with a significantly improved offer: $15,000 per-acre signing bonus, 25 percent royalty, and a three-year term with a two-year option.
"It was all contingent upon us signing leases by the 18th of January," Morris Scales, one of the North Benbrook organizers, says. He quickly put out the word that "I thought this was a good deal," possibly "the best we were going to get."
Committee members bought in and the neighborhood rushed to get leases signed over the next eight days. It organized signing meetings at a Western Inn hotel in the city. Scales says the group even sent lease packets to property owners who were out of town or working abroad, as far away as Qatar, Brazil, California, and Arizona. In one case, they tried to reach a couple on a cruise vacation in Australia and New Zealand.
The lease agreement covered more than 800 homes in several neighborhoods. Two coalitions -- Scales' and a second, smaller one, led by the Brookhaven Estates neighborhood, which received lease offers earlier than the rest of North Benbrook and hired an attorney to 
represent them -- negotiated similiar contracts with HTP. Scales' group took on the same attorney as an adviser.
Among the terms, the 25 percent royalty is free of most costs. Scales, an aeronautical engineer, said the acreage calculations don't include measurements to the centers of streets for purposes of the signing bonuses, "but we get that in the royalties." The association also doesn't know for certain where the drill sites will be.
"It remains to be seen, to a certain extent, how this is going to develop," Scales said. But "if there's a drill site that's a high-impact site (meaning it falls within the city's permissible distance to structures such as homes), we reserve the right to talk to our City Council."
He also believes it's still possible that Chesapeake and XTO Energy, which had contacted the neighborhood to determine its interest in a negotiation, could end up trading leases, given that XTO already has a working well nearby off of Chapin Road.
Other tidbits:
- The North Benbrook association says it ended up representing more than 800 homes, HTP told the neighborhood that the company signed up 2,200 leases in the area, Scales said.
- North Benbrook had contacted the nearby Western Hills neighborhood to divine its interest in joining forces, but "they couldn't get organized," Scales said.
- The Brookhaven group collected $50 per household for the attorney and paid him $4,050, said Marvin Rudd, one of the Brookhaven organizers. The significantly larger portion of North Benbrook also collected $50 per househoid for legal costs, and will end up returning at least half that, Scales said.
- By organizing and remaining patient, the neighborhood significantly improved on early offers of $3,000 per-acre signing bonus, notes Rudd, a retired major subsystems buyer for General Dynamics and Rockwell and a one-time oil patch worker. Offers from competing companies hovered in the $5,000-$6,000-per-acre range and stayed there until HTP bumped them from $8,000 to $10,000, and then to $15,000, Scales said.
- With Paloma out of the bidding as an independent player, Scales said he wouldn't be surprised to see bonus offers begin to sink. "They're going to try to put the genie back in the bottle," he said.
-- Scott Nishimura
(Photos: Lake Benbrook)
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