Cashing In on the Utica Shale Boom
Posted April 8, 2014
Family farm owner, Brad Smith, takes pride in continuing the family legacy of the Smith Family farm. For years, the farm has been producing soybeans, corn and wheat in the Utica Shale territory of Ohio.
Born and raised in Columbiana County, in the heart of the Ohio Utica Shale territory, Smith was used to calls from oil and gas companies interested in purchasing his mineral rights. Knowing the risks associated with a full sale, Smith was never interested in selling his oil and gas royalties.
But, like many farmers, Smith knew having some extra money couldn’t hurt. When Gateway Royalty reached out to him, he got the feeling the company was different than others.
“One day I got a letter form Gateway and it just really hit home with me, “ said Smith. “I decided to give Chris Oldham a call… and for me, it was a no brainer.”
A Gateway Royalty land agent traveled to the family farm located above the Utica Shale. Soon after, Smith was presented a check for selling a portion of his oil and gas royalties to Gateway Royalty. Unlike most full mineral sales, Smith was able to retain ownership of 50 percent of his royalties—a unique benefit associated with a Gateway Royalty partnership.
And thanks to the oil and gas boom in the Utica Shale, the same is true for many Ohio residents.
Discovered in the early 2000s, much of the Utica Shale formation sits directly beneath the state of Ohio. Thousands of Ohio residents who are realizing the potential of their land are taking the opportunity to sell a portion of their oil and gas royalties to mineral buying companies due to the many benefits associated with the transaction.
So, what are those benefits associated with a partial sale as opposed to a full sale? For starters, landowners engaging in partial sale won’t need to wait 10 years to receive money after the lease agreement—a common characteristic of most full mineral sales in the Utica Shale territory. In addition to quick cash and no delay in development, landowners selling a portion of their oil and gas royalties receive potential favorable income tax treatment, estate planning and asset diversification. Plus, they don’t have to worry about the risk of their land producing marginal or dry wells.
It’s because of these reasons that landowners in the Utica Shale play are cashing in on the oil and gas boom. Residents, like Brad Smith, can pay off mortgages and save on interest, among other benefits.
“I was able to help people, pay off some extra bills and even treated myself by purchasing a new John Deere gator and finishing off the man cave,“ said Smith. “It was like a weight was lifted off of my shoulders.”