Banks, extension service, organizations trying to educate farmers, others in Ohio about oil and gas

Oil and natural-gas companies are migrating into Ohio and pressing farmers to sign five-year leases to drill on their land in the hope of tapping the Utica and Marcellus shale formations under 5 million acres where deposits are estimated to be equivalent to billions of barrels of oil. John Funk of The Plain Dealer reports that the economic benefit for Ohio could be tremendous, "but so are the challenges for landowners, many of them poor farmers who must first sort through the thorny offers of oil companies, and then wrestle the financial decisions of sudden wealth." To see the Cleveland newspaper's graphic illustrating the Ohio drilling rush, hydraulic fracturing and more, click here. Part of it is a map, above, showing recent permits for vertical (red) and horizontal drilling, which uses fracking.

Some farmers are receiving six figures or more for leasing their land, but many don't know how to properly handle such amounts. Dale Arnold of the Ohio Farm Bureau Federation told Funk that many farmers who lease are buying equipment, trucks and tractors and paying off mortgages, but rarely think about the implications that come with large amounts of instant money. Said Arnold: "When you get a check for $80,000 to $250,000, you need help restructuring your business, working with an estate planner, making sure the money is an asset for several generations."

Bank branches, extension educators, Farm Bureau and economic-development officers are trying to educate farmers about energy leases and how to handle the money. Jeffery Herold of PNC Wealth Management in Akron told Funk it has stocked its branches with literature and qualified attorneys to give advice about leasing and financial management to farmers. Funk reports these groups want farmers to know the risks associated with leases and be aware of the tax liabilities. The Cooperative Extension Service and Farm Bureau are trying to educate attorneys, few of whom are oil and gas experts. (Read more)