Wednesday, March 25, 2015

Buyer beware when oil and gas companies offer to buy mineral rights; royalties not included

Some oil and gas companies have begun asking property owners to sell mineral tracts outright, instead of signing a lease, a move that might look good financially to residents at the outset but could end up costing them down the road, Casey Junkins reports for The Intelligencer/Wheeling News-Register. It's a buyer-beware story that land owners should be sure to note.

"The practice can be beneficial for property owners in that the up-front payment likely will be higher than what is offered through a lease agreement," Junkins writes. "But royalties are not included, and for tracts with true drilling potential, this could mean the loss of hundreds of thousands of dollars over the life of a lease."

Tim Greene, owner of Land and Mineral Management of Appalachia and a former West Virginia Department of Environmental Protection inspector, told Junkins, "Lots of companies just buy them and flip them onto someone else. But if they buy all the minerals, that is it. You won't get any royalties or anything else. If getting $100,000 right now could change my life, selling out might be something I am interested in."

Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, "said some firms purchasing oil and natural gas minerals may already have agreements to transfer those properties to established drilling firms," Junkins writes. "Sometimes, companies do this so they can acquire the land at a lower price than they would have to pay if property owners knew the identity of the ultimate owner." (Read more)

No comments: