- Advertisement -
  • Most Commentedmost commented up
  • Most Emailedmost emailed up
  • Popularmost popular up
- Advertisement -

« News Home

Landowners leasing mineral rights urged to be wise with their money

Published: Mon, May 28, 2012 @ 12:00 a.m.

By Burton Speakman



Some local landowners have made hundreds of thousands or even millions of dollars leasing mineral rights to their property, but will those same people be broke in just a few years?

Any responsible lawyer or adviser who is working with someone on a mineral-rights lease should recommend their client to work with someone on investments, said Alan D. Wenger, a Youngstown attorney with Harrington, Hoppe & Mitchell LTD. This would help avoid potential problems in the future.

The majority of lease payments are for $2,500 to $5,000 per acre, said Rhonda Reda, executive director of the Ohio Oil and Gas Energy Education Program.

In Ohio, the minimum amount of property needed for a horizontal well is 640 acres, she said. This means the company has invested $1.6 million to $3.2 million to one or several landowners just to lease enough land to drill.

“It’s a huge investment without any guarantee of return,” Reda said.

At a March meeting of the Associated Landowners of the Ohio Valley in Trumbull County to discuss the recently signed deal with BP, there were business lawyers, certified public accountants and tax advisers at the session in addition to the lawyers negotiating the lease terms, Wenger said.

“We tell them to take a deep breath and at least not buy that second Cadillac,” he said.

The personality of those involved in the transaction makes Wenger less fearful that a number of those who signed lease agreements will go quickly through their money, he said. They tend to be frugal.

“Most of the people that we’ve been dealing with are older and have a conservative mind-set,” Wenger said. “A lot of them grew up or had parents who grew up during the Depression, but there may be a few that who aren’t like that.”

Harrington, Hoppe & Mitchell LTD will host a financial seminar open to landowners from the Trumbull County negotiations with BP. The company also has had a seminar in Columbiana County for landowners, Wenger said.

Anyone who signs one of these leases should put just as much time in deciding what they will do with the upfront payments they receive as they did deciding with whom they would sign a lease, said Frank Hierro, president of the Mahoning Valley Region for Huntington Bank.

Huntington spoke with the Trumbull residents who were part of the ALOV deal with BP, he said.

“We told them they shouldn’t rush out and make investment decisions, Hierro said. “We told them they should sit down with someone, take the time to get counsel, and make the right decision.”

The information on lease-payment spending is that many of the people have used it to pay off debts and purchase new farm equipment, said Linda Woggon, executive vice president for the Ohio Chamber of Commerce.

The investment BP made in Trumbull County of more than $330 million is “off the charts,” Hierro said.

For some people, that money has the potential, if handled correctly, to carry them financially for the rest of their lives and possibly for their descendants, Hierro said.

Those who are receiving lease payments or royalty checks need to determine what their goals are just like any person who has experienced a financial windfall, said Gary Jergler, a Sharon-based investment broker.

There are a lot of people receiving these payments, and some of the options being presented to them are not good, he said.

“One of my clients went to an event and they told him to buy a higher life-insurance premium so his family would get more when he died. That’s a terrible idea,” Jergler said.

The real money for wells that are successful is the royalty payments, which average 12.5 percent to 15 percent in Ohio, Reda said. The average lifespan for a horizontal well is 20 to 40 years.


1misterlee(118 comments)posted 3 years, 5 months ago

For someone who is in this town only to make some money before going back to Texas, you sure throw the word "carpetbagger" around a lot when describing others. Reading your posts is like a psychology lesson on Freudianism.

Suggest removal:

2misterlee(118 comments)posted 3 years, 5 months ago

Remember how you've said before that people who can't debate intelligently just name call and make ad homonym attacks? About that...
You've called me "Mr Chin" because you've assumed I'm Asian because of my username. Now you're making gay slurs. Shows your level of ignorance you racist homophobe. You've added nothing of any intellectual substance to any stories you've commented on. You simply troll and insult this city and it's citizenry.
If you're such a superior being and feel you're totally in the right why don't you post the name of the company you work for? If you are such an honest person trying to do good for this area I'm sure people would want to know who to sell their land to.

Suggest removal:

3300(573 comments)posted 3 years, 5 months ago

Misterlee, perfectly said.

Utica, you've asked numerous times about whether people have leased their land, and you got answers. You asked how I make a living, and I answered.

Now, answer Misterlee. What do YOU do for a living. Are you a CHK employee? I'm actually thinking that you might be one of the seismic people. Just a guess, though.

Suggest removal:

4MFC997(258 comments)posted 3 years, 5 months ago

Three words ... Fair Market Value ...

Suggest removal:

5misterlee(118 comments)posted 3 years, 5 months ago

Working in Asia doesn't mean you "know Asians". You don't find the "big intelligent keeper" because you just want a fellow good old boy to stroke your ego. You don't want to actually debate to gain knowledge or even to give useful knowledge.
I looked up Malampaya, I can now safely say you work for Shell or Texaco. Since you're from Texas I think we may be able to narrow that down more. You're making your employer look bad, do you want this to blow up in your face? I think this behavior could cost someone their job.

Suggest removal:

6300(573 comments)posted 3 years, 5 months ago

Utica, you shouldn't be calling anyone a loser. I read over your post above, and I saw that you've lived extensively in Asia.

This really comes as no surprise after your previous posts. It's clear that you've never made it to the boardroom. If you're still being sent on locale for extended periods then you're at best middle management. You talk like you're someone special, but as you already know, the powerful people at whichever firm you work at do not relocate for years at a time. If at your age you're still being sent out on projects, then you've plateaued. In which case, you're in no position to be lecturing on who's a "loser".

I'm not saying that you shouldn't be proud of what you do, but you need to realize why you're the one walking around "the hood" as you put it.

If you do work for CHK, and they find out that you're pointing out how they lowballed everyone, you'd be sacked immediately. So, I'm guessing that you're seismic. And, instead of saying "go do your homework on me", which I wouldn't bother to do even if I did know your name, just give a clear answer. You can be vague, I was in my answers, but stop beating around the bush. What do you do?

Suggest removal:

7DontBanThisDrone(811 comments)posted 3 years, 5 months ago

^ lol


Suggest removal:

8WHATSSHAKIN(42 comments)posted 3 years, 5 months ago

The wealth after the leasing,TEXAS STYLE.


Valero Energy Corp

$22.87 USD

The Eagle Ford shale formation will put out 500,000 barrels of crude oil a day by the end of the year, Valero Energy Corp. (VLO) (VLO) Chief Executive Officer Bill Klesse said after the company’s annual meeting in San Antonio.

Producers have told him output from the South Texas formation may rise to 1 million barrels a day in the next few years, Klesse said. Production in 2011 averaged 60,000 barrels a day, according to data from the Texas Railroad Commission, which regulates the energy industry in the state.

“It’s going to back out sweet crude imports into the United States, and that’s going to happen by 2014,” Klesse said.

The rising production is decreasing feedstock cost at Valero refineries in Houston, Corpus Christi and Three Rivers. The Houston refinery, which used to get all its crude oil from west Africa, now runs almost entirely on cheaper domestic crude, he said.

Klesse said he expects more oil from Canada and the U.S. Midwest to be moved to the Gulf Coast in the coming years.

He said he believes President Barack Obama will approve the northern leg of the Keystone pipeline project in early 2013 if re-elected.

“My goodness, we slapped Canada in the face,” Klesse said. “He’ll fix it.”

Suggest removal:

9misterlee(118 comments)posted 3 years, 5 months ago

We know about fracking, we've had earthquakes that alerted us to it late last year. I'm not against fracking, I think the money will be a great thing for this area even though the environmental concerns worry me a little. The steel industry left this place in really bad shape environmentally and economically so people here aren't trusting of big business.
When you talk down to people and treat us as subhuman simply because we don't agree with you it tends to make people have a bad opinion of you. I can't believe I'm giving a grown man a lesson in normal social behavior but you've left no other option. You're making people less trusting of your industry and putting an ugly face on things.
Keep doing what you're doing in the community, I don't think any of us have a problem with it, but stop acting like we need a "cowboy" to teach us third world heathens how to act. This is a community of good people and the minority who are here simply for the low cost of living make us all look bad. The people you're trying to get through to aren't on this site. Those of us who read the news regularly are educated active people, you're preaching to the choir here. Stop being an @$$4013 you're not helping anyone's situation, you're just being a troll getting your rocks off pissing people off.

Suggest removal:


HomeTerms of UsePrivacy StatementAdvertiseStaff DirectoryHelp
© 2015 Vindy.com. All rights reserved. A service of The Vindicator.
107 Vindicator Square. Youngstown, OH 44503

Phone Main: 330.747.1471 • Interactive Advertising: 330.740.2955 • Classified Advertising: 330.746.6565
Sponsored Links: Vindy Wheels | Vindy Jobs | Vindy Homes