Companies Offer to Buy Royalty Rights from Ohio Landowners

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Carroll County, Ohio is in the midst of a shale gas whirlwind. Signing bonus offers are being made to landowners in the $3,000-$5,000 range. But that’s not all. For landowners who previously signed, several years ago, some companies are offering to purchase royalty rights from landowners, even for wells that are not drilled and may never be drilled. Here’s the story from one such landowner:

A new industry has roared into once-sleepy Carroll County, offering a glimpse of the power of an energy boom, and much in this community will never be the same.

That thought hit home with Carroll County Commissioner Thomas Wheaton just last Monday, when he opened a letter from the Venable Royalty Co. of Dallas.

Like most every landowner around Carrollton, the county seat, Wheaton has been offered cash for the mineral rights to his property. Representatives of a handful of energy companies, Chesapeake chief among them, are offering signing bonuses and a share of the proceeds from whatever gas or oil they can wring from the land.

Wheaton signed two years ago, when the going rate was $50 an acre. Today, after further testing and some successful strikes, land men are offering between $3,000 and $5,000 an acre.

But his mineral rights are not what the Dallas guys are after. They’re asking Wheaton to sell his royalties, his contractual right to 12.5 percent of profits from a well that has not yet been drilled and may never be drilled.

They’re offering $244,000.

Wheaton, a retired AT&T executive and a gentleman farmer, plans to decline. He’s not being greedy, just realistic. Like everyone around here, he’s beginning to realize what "boom times" might mean.

"I think it’s beyond our imagination," he said. "We have people knocking on our doors every day to buy land, to build buildings, to tell us they’re coming in with another 100 trucks. We’re just trying to keep up."

Glenn Enslen, the county’s economic development director, figures Carroll County — a staid farming community of 30,000 — stands to see about $1 billion in new investment if the rosiest scenarios come true.*

*Cleveland The Plain Dealer (Oct 23, 2011) – As drillers strike gas, sleepy Carroll County braces for boom times

8 Comments

  1. Reading stories like this for a NY landowner is like going to the county fair and watching the girl you have a crush on dancing with the star QB from the rival town. All you can say is why can’t that be me?!  

  2. The article did not say how many acres Thomas Wheaton owns. But the acreage is kind of beside the point. Don’t misread the story (it’s hard to convey the subtleties in this story!)… he was not offered $244K for X number of acres, but that amount for any and all future royalty checks he might receive from a single, or multiple, wells that may (or may not) be drilled on his property. The company offering was making a gamble with Mr. Wheaton. If wells are drilled, they would probably make out in the end. But if no wells were drilled, Mr. Wheaton would be the “winner” in that case. I included this story to alert people to these kinds of offers now being made.

  3. What is a fair price per acre to buy mineral rights. A firm just offered me $3000 per acre to buy 50% of my royalties…

  4.  A firm making such an offer would have already calculated a return on their investment  several times what they put up. So unless you can’t wait,
     the smart thing would be to use their offer as confirmation that you are going to be much richer if you can be patient a little longer.