The Value of Land for One Eastern Ohio Landowner

How much are your lease rights worth? It all depends on where your land is located. Right now, eastern Ohio seems to be commanding the best lease and royalty deals. PBS station WVIZ in Cleveland aired a story yesterday about an 82 year-old woman, Jackie Pendleton, who lives by herself on 62 acres of land in Columbiana County, OH. The offers she’s received for both her mineral rights and the outright purchase of her entire property have made her head swim.

When companies approach landowners about leasing their land, they offer signing bonuses, and the promise that the landowners could reap ten to twenty percent of the royalties from the gas produced in the future. That makes the mineral rights quite valuable.

Exactly how valuable?

Pendleton: “I had one offer for just all my rights for $128,000. I’ve had $300,000. So it’s very confusing. Is it really worth that much? I don’t know—they’re not doing very much of anything around here really.”

That’s part of the gamble. It’s still not clear how big the anticipated drilling boom will be. Although more than two hundred wells have been permitted in the Utica Shale, only 10 are currently producing any gas.

…she could sell the home, the land, and keep the mineral rights to herself, but, she worries…

Pendleton: “Would you want to buy a property in which you were not sure, but maybe, somebody would be coming and doing this and doing that and digging pipelines and that sort of thing, and you would have no control over that because the mineral rights and the lease is sold? I would not buy that either.”

Her other option, is to sell everything—the house, the land, including the mineral rights.

Pendleton: “I have been approached and offered $400,000 and that was for everything, the mineral rights, the property and the house and everything. And I was tempted, but then I thought my grandchildren someday might get a whole lot more out of this if I hang on to it. And they tell me it’s your decision. And I just don’t know what to do.”

For now, Pendleton says she’s leaning toward selling the home and a few acres with the minerals attached. That way, her family could keep the remaining land and mineral rights in hopes that the company leasing it now will eventually produce gas.

Any advice for Jackie? What would you do?

*WVIZ Cleveland (Jun 3, 2012) – Landowners Hedge Their Bets On Selling Mineral Rights