New tactic by gas companies?

A coworker has 270 acres 25 miles west of Wheeling WV.  He's in the wet gas region of the Marcellus shale.  Anyway, his lease is going to runout in 10 months without activity.  He got a call from his lease holder, name unknown to me, offering him $14K per acre to buy his whole royalty out.  He said maybe for $30K an acre he'd think about it.  Apparently the drilling companies are taking advantage of the fact that the Marcellus region is populated with a lot of old folks who need money now rather that wait.  I don't know if this is a new tactic or not.  My coworker is only 35 years old so he is not inclined to take the deal but I bet there's plenty of folks who will.

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Permalink Reply by Chartist on January 29, 2012 at 7:55am

Well, my acreage is located in Somerset county PA.  My lease runs completely out in Feb 2013 and I was wondering what the going rate was out there for royalty selling as I expect Chevron to try this tactic with me and my neighbors in a year or so.

 

 

Permalink Reply by Finnbear on January 29, 2012 at 8:22am

Dry gas area?

Permalink Reply by Chartist on January 29, 2012 at 9:25am

yeah....I think CHK drilled a vertical well about 6 miles from my property.  Since they didn't brag about it in their Utica test well results last fall, I suspect it wasn't a great producer due to depth. 

Permalink Reply by Finnbear on January 29, 2012 at 11:54am

CHK is in the process of mothballing their dry-gas Marcellus/Utica leaseholds to move rigs into the more profitable Utica wet-gas areas. The gas is still there - when natural gas prices rise again they will be back at it again.

Permalink Reply by Frank Walker on January 29, 2012 at 3:01am

Taxes are an important consideration.  2012 is the final certain year for the Bush rates.  After this year who knows what will happen.  But taking so much income in one year is tax suicide.  And structuring a payment deal to avoid the one-year tax hit is very, very difficult to accomplish legally.

Permalink Reply by Linda A on January 29, 2012 at 4:18am

There are some minor ways to minimize - first, get a good CPA for advice on taxes - they also assist with investments as well.  If the income is huge, chances are you have big acreage and are a farmer, thus can immediately invest in capital - farm equipment, new or upgrading barn, vehicles used on the farm etc etc.  Also, can give, tax free, $11k to children AND anyone else you want!  Charity and Churches would be ever so grateful - give it to anyone and just say 'NO' to taxes.

Permalink Reply by Mike h on January 29, 2012 at 4:38am

This is a good example why you should not take tax advice from random people on the internet. Linda Anthony is incorrect when she says you can give 11k tax free. The correct (current) limit is $13,000.

Permalink Reply by Linda A on January 29, 2012 at 6:24am

well, the main idea was to let people know you can give to anyone... and it was a typo I didn't catch.  Have had a CPA do our taxes etc for over 40 years...

Permalink Reply by Schnoozie on January 30, 2012 at 10:13am

I see everyone was typing all weekend.

My point was that the 14,000.00 per acre cash offer is a myth, just something that people write online for their own enjoyment, to watch people react.

Permalink Reply by Finnbear on January 30, 2012 at 12:34pm
Jim Smith
Schnoozie just insinuated that you are either a liar or a troll. What do you think about that?
Permalink Reply by Mike Filer on January 31, 2012 at 2:42am

If someone offered me $5000.00 a acre cash for my 89 acres w/house + barn + land and 100% OGM's. I would walk out that door and never turn back.

Permalink Reply by Schnoozie on January 31, 2012 at 2:49am

Absolute proof of a landowner that recieved a $14,000.00 per acre offer in U.S. funds of course, would do.

What's a Troll? Like a Mythical Troll under a bridge in a fantasy-mystery novel?

I don't get it.

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