PPL battles homeowners over drilling royalty checks on forgotten land

Growing up in the 1970s, Charles Chidester would often find old rail spikes from the abandoned Northern Electric trolley line that bisected the family farm.

Dairy cows grazed over the right-of-way that hadn't seen a trolley car since 1931. In places, the rail bed stretched under a lush tunnel of trees that young Charles would walk to get around Brooklyn Twp.

"We thought it was ours," he said.

The families of several property owners have used the forgotten rail bed for generations. But an heir to the old Northern Electric trolley line was eventually found: PPL Electric Corp.

PPL officials didn't even know the company owned the old rail line that once carried passengers from Scranton to Tiffany Corners, just west of Montrose. Cabot Oil & Gas Inc. untangled the mystery of the rail right-of-way last year as it sought to sign mineral leases with landowners. A savvy title searcher had a hunch that the missing link in the ownership chain may have been misfiled in Wyoming County. It was.

http://thetimes-tribune.com/news/ppl-battles-homeowners-over-drilli...

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great article! i wondered when that old trolley line would be sorted out.

and there's more than just the land/mineral dispute in that article.

this: "How much is an acre worth in royalties? According to a MarcellusGas.org, under a standard one-eighth royalty agreement, a well that produces 4 billion cubic feet of natural gas with a wellhead price of $2.86 per thousand cubic feet will yield $25,000 of royalties per acre over the well's lifetime. In Susquehanna County, where wells are surprisingly productive, the result could be several times that. Cabot estimated ultimate recovery from an average Marcellus well is 13.9 billion cubic feet."

is also a great takeaway. at a 4 bcf eur, 1 acre may generate $25,000 lifetime at $2.86 gas...

gas is already higher than $2.86, and cabots' current eur's are over 3 times the 4 billion used to estimate the $25k, those facts make the eur on an acre in the $75k+ range.

another overlooked fact is that those eur's are only for the union springs interval of the marcellus. add the oatka creek, which cabot has already drilled, produced and estimated for eur's and those same acreage eur's are around 20 bcf combined.

i used to estimate that an acre of good shale with a good lease and a 20%R, would eventually pay $100-150k.that estimate stands well today and may even go up some more asthe play develops. basically, 10 acres oughta get you a million conservatively.

how many still wanna sell those gas rights at $5-10k/acre?

wj

 I like your numbers wj.

To go one step further, and i have asked this before, who owns the rights under state roads and how long before the State thinks of this...

MA; I don't know about you, but I pay property taxes to the center of the road, state and township...therefore I get the royalties under the road.

They (the state) took 50ft. or so along one edge of my property and thats what the deed shows, so when I leased thats what I got paid for. If I dont get paid on the gas and the state don't get paid, then I guess the the driller would keep the money. Not alot for me, but when you think of all the road in the state it adds up.

you are right when i got my land serveyed they went fron the center of the road good point who does get the royalties from unclaimed and repo property?

mark, i'm glad you like the numbers, i certainly do too.

but would you mind verifying them?

if you get royalties now, run your numbers and see what you come up with, that's what i did when my checks started coming.

if you dont get checks, when you see information such as is contained in that article, like in company quarterly reports, do the math and see what you come up with. i do that too.

and everyone should keep in mind, that cabot is talking about the nepa dry gas area. wet gas, liquids and oil, or other areas of dry gas production will have different results.

and if you take a look, you can easily see that the production numbers so far for cabot, support their claims. i'm pretty sure that cabot already has wells that have produced 5 bcf, and those wells are still producing without restimulation. citrus and chk have wells that have produced several bcf also.

wj

At the beginning of this play in N E Pa. Penn State U claimed that there was $500,000.00 worth of recoverable gas per acre in the Marcellus Shale, so at 20% that would be $100,000.00 per.

We are in N E Lackawanna county and nothing been drilled down here as of yet.

Mark do you happen to know gas price at the time of this estimate?

Did Penn State also say what percentage of gas in place was considered recoverable?

Thanks.

i think you are right i read a post on here where Aubrey mclendon of chk said an acre is worth 35000$ and they give us a couple thousand an acre and they still want to deduct from our royaltys

in most cases with township and state roads, the landowners own to the center of the road. the road is just a right of way across the property.

i think some interstates and other major highways may be different. but i'd betya that if your land were to be condemned for an interstate project, you would be able to sever the oil and gas rights before it was taken by eminent domain, and retain them.

wj

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