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District will receive $500,000 up-front payment if gas is found beneath the school property, then 17% royalties

Pittsburgh’s East Allegheny School District gave the thumbs up to natural gas drilling on middle school property to raise much needed funds for education, KDKA Television reported yesterday.

Under the lease agreement, EQT Corporation (ticker: EQT) will explore 170 acres owned by the East Allegheny School District for natural gas. The lease agreement calls for EQT to make an up-front payment of $500,000+ if gas is found. The school district will receive proceeds of “17% of whatever is being earned by EQT,” district solicitor Dan Beisler told KDKA.

Under state law, EQT won’t be able to drill within 500 feet of Logan Middle School, but the 170 acres under lease should provide ample space for drilling without disrupting school activities.

The district is facing a budget deficit in excess of $1.1 million and needs revenue, KDKA reported. The district hopes this solution is a way to avoid a tax hike.

Some neighbors and environmental groups expressed concern over an industrial activity so close to a school, but it’s not the first time this has been done.

Oil and gas companies have developed drilling and completion methods that are very safe, fast and quiet when drilling near developed areas. In Greeley, Colorado, Synergy Resources (ticker: SYRG) successfully drilled and completed a well on leased property near a school soccer field and finished the project in less than three weeks with minimal disruptions.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.