LEXINGTON, Ky., March 13, 2012 /PRNewswire/ -- Rhino Resource Partners LP (NYSE: RNO) ("Rhino" or the "Partnership") today is pleased to announce a lease agreement with Chesapeake Exploration LLC (" Chesapeake") for an estimated 1,500 acres the Partnership owns in the Utica Shale region in Harrison County Ohio. The lease agreement is for an initial five year term with an optional three year renewal period and conveys rights to Chesapeake to perform drilling and operating activities for producing oil, natural gas or other hydrocarbons. As part of the lease agreement, Chesapeake agreed to pay the Partnership the sum of $6,000 per acre as a lease bonus, or an estimated total of $9,000,000, of which $500,000 was paid at the signing of the lease agreement. The remainder of the lease bonus payment shall be paid by Chesapeake to the Partnership within 90 days from the date the lease agreement was signed, subject to title verification of the acreage by Chesapeake. In addition, the lease agreement stipulates that Chesapeake shall pay the Partnership a 20% royalty based upon the gross proceeds received from the sale of oil and/or natural gas recovered from the leased property.
Dave Zatezalo, President and Chief Executive Officer of Rhino's general partner, stated, "We are pleased that our diversification efforts with a particular focus on oil and gas have begun to yield results in the form of this $9 million lease bonus. We believe our holdings in the play will provide attractive returns to the Partnership, and in addition, we are actively looking for additional ways to generate cash flow from the development of the Utica."
About Rhino Resource Partners LP
Rhino Resource Partners LP is a growth-oriented limited partnership. Rhino produces metallurgical and steam coal in a variety of basins throughout the United States, it leases coal through its Elk Horn subsidiary, and it owns oil and gas acreage in the Utica and Cana Woodford plays.About Wexford Capital LP Rhino's general partner, Rhino GP LLC, is an affiliate of Wexford Capital LP ("Wexford"). Wexford is an SEC registered investment advisor with over $5.6 billion of assets under management. Wexford has particular expertise in the energy/natural resources sector with actively managed investments in coal, oil and gas exploration and production, energy services and related sectors. Through Wexford's extensive portfolio of energy, resource and related investments, it sees an extensive flow of potential new investment opportunities, many of which could be suitable for Rhino. Although Wexford has no obligation to provide such investment opportunities to Rhino, it has made available several of these investments to Rhino and expects to be in a position to continue to selectively source and underwrite for Rhino new coal, energy and related investment opportunities. Additional information regarding Rhino and Wexford is available on their respective web sites – RhinoLP.com and Wexford.com.