Pennsylvania Land Owners Upset About Gas Drilling Royalties

From WENY TV----> A must watch video for landowners ---> http://youtu.be/s4fbpORf8Zc

From WENY-TV describing their video "Gas Drilling Royalties"

BRADFORD COUNTY, PA (WENY) -- Bradford County land owners with drilling leases are speaking out about their royalties disappearing. They're teaming up with Bradford County Commissioners, and calling on Pennsylvania lawmakers to take another look at the Guaranteed Minimum Royalty Act.
In 1979, Pennsylvania adopted the Guaranteed Minimum Royalty Act, making sure people leasing their land to gas companies got at least 12.5 percent of royalties. But now, landowners are being hit with post-production costs as high as 90 percent. Those production costs make landowners profits way lower than they thought, and now, neighbors and commissioners alike have had it with some gas companies.
They're arguing that people leasing their land to gas companies are not getting their fair share of royalties.
"This really is an arrogant move and the trouble is that you know, the vast majority of operators in the U.S. are good operators, who care about the ppl they serve, but you get arrogant ones that just don't," said Bradford County Commissioner Doug McLinko.
Jackie Kingsley of East Smithfield is just one of many neighbors frustrated with a company she lets lease from her.
"It gets frustrating and after a while you just have to say, enough is enough and look the other way, I guess," she said.
But some landowners don't want to look the other way. A lot of them are still scared to speak out, but hope state lawmakers make a change.
"We have very humble and good people most people will not speak out, we've had a lot of people that called and send us their checks and are just dumbfounded with what's happening," said McLinko.
One woman shared some of her tax forms with WENY HD News. Chesapeake Energy and Statoil have been using her land since before she moved in in 2007. Back in July, she was getting about 65% of her royalties, but in January, she got no royalty at all. After reaching out to Chesapeake, she got a combined 25 percent of the royalties due her in February and January. And it's been going down ever since. In March she says Chesapeake kept almost 82% of the royalty.
"So really what we need is to have this looked at and revisited. Is there something that can be done to clarify and reinterpret what was meant by the intent of the 12.5% minimum royalty Guaranteed Minimum Royalty Act," said County Commssioner Daryl Miller.
Comissioner McLinko says natural gas drilling benefits neighboring New York, and he is going to Albany this week to talk to lawmakers about it.

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Replies to This Discussion

Permalink Reply by Janice L. Hancharick on June 25, 2013 at 3:00am

This situation is not new.  The guaranteed 12.5% royalty offering  in a lease does not say enough.  Did the state say that percentage was to be figured on gross or net income?  Companies figured that out long ago when all the Marcellus action began.  The 12.5% was the state's suggested minimum, not a mandated number. Those who signed for higher royalties felt very good indeed, but often did not check the fine print that followed.  It almost seems the higher the royalty number got, the finer the print became.  OGM owners often signed leases that allowed the development/production companies to deduct their expenses for the whole process.  That's a monetary number that would fluctuate just as royalty earnings fluctuate. Prices for everything go up and down!

I'm VERY sympathetic to those who signed leases they didn't understand, but also doesn't that point the finger in a whole different direction?

So many educational opportunities have been presented in the past 5 years alone, explaining the ins and outs of leasing for drilling, pipelines, etc.. Penn State's Marcellus Center has honey-combed PA and beyond with informative meetings.  Numerous land-owner groups do the same long before leases are signed. This whole business is NOT  STATIC ... in technology, in market situations, in lease-wording. "Keeping Up" is the name of the game.  Forward-thinking has become a must.

Now folks understand that the value of a landowners group should certainly go beyond $$$.  Lease wording IS the last word.  It's a legal document that wasn't signed under duress, but by the landowners' own choice.

It's explained @ each 4-County meeting ... "There's more to this business than $$$ and %'s. Leasing IS a choice. Altered wording to protect an individual's valuable timber, a sugarbush, specialized crop areas ... these affect daily life. They are do-able. It's the royalty wording that can go on forever."

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