Pa. banks, homeowners examine oil and gas leases

Pa. banks, homeowners examine oil and gas leases by Associated Press, September 2, 2012
PITTSBURGH — When Donald Yost tried to refinance his home about 30 miles north of Pittsburgh in January, he met a roadblock. It wasn’t his credit score — he had a solid rating — or the appraisal he’d paid almost $500 for — that was good, too. Instead, it was the lease he has that allows a company to drill for gas about a mile underneath his property, similar to leases that many of his neighbors have. Yost said that in the middle of the application process ESB Bank told him the gas lease was too prohibitive. So he went to the drilling company, Rex Energy, which agreed to subordinate their claims to the property — in other words, to put the bank’s interest first. “They were actually very good,” Yost said of Rex. But Yost said a bank representative then told him that no loans would be given to anyone with a gas drilling lease. And that’s what upsets Yost the most, he said: that the bank didn’t tell him upfront that homes with leases didn’t qualify. He said it also declined to refund what he’d paid for his appraisal. … The Department of Environmental Protection estimates that more than 350,000 oil and gas wells have been drilled since 1859. Pennsylvania led the nation in oil production in the late 1800s, but had faded to a minor role until the Marcellus boom. [Emphasis added]