Land and Natural Resource Management
Middlesex Energy Partners LLC will help you to profitably manage your land and natural resources.
My interest in offering land management services stems from years of observing the mismanagement of land, timber and mineral holdings throughout our operational area. Below, I will explain some of the ways that I would go about maximizing income and property values, while minimizing expenses and liabilities associated with owning rural land, or natural gas, oil, or coal rights.
The first thing you want to do is know what you own. What you own in the court house, and what you own in the field. Courthouse work will establish which rights you own (oil, gas, coal etc.) what you don’t own, and what past agreements you may be subject too, (leases, easements etc.). After that, you can utilize topographic, and aerial photos, well records, and well plats for additional information before heading out to inspect the property in the field.
Proper title work, and a visual inspection in the field will give you a good idea of what you have to work with. I will go over the main components of the value of rural land in our operational area. They are: surface value, timber value, oil and natural gas value, and finally miscellaneous values, which would include, coal, limestone, sand and gravel, and communication towers, windmills, solar farms, and recreational value, like hunting leases. Remember, we want to maximize income and property value, while minimizing expenses and liability exposure.
Surface Value: My first rule of property ownership. Take control and act like an owner. Establish your property lines, make sure you have access to your property and control the access of others, as much as possible. We live in a litigious world, where, in my experience, there is often little respect for private property, and little personal responsibility on behalf of individuals. By not, establishing ownership, and limiting access, you are asking for trouble. Absentee owners, invite all forms of trespass, including: timber theft, the dumping of refuse, and the potential liability claims, and property damage by ATV’s, or hunters.
Our land management goals are to maximize income and land value, and minimize liability and expenses. It’s OK to allow hunting and recreation, but it is best to limit it to those who have signed a waiver of liability. Signing a hunting lease with individuals willing to pay for the privilege accomplishes both the minimizing of liability and maximizing cash flow generated by the property.
Finally, the biggest question to ask yourselves when you own a property is why? IF, it is not appreciating in value, and much of rural Pennsylvania (surface) is not, and there is not a timber crop that is gaining in value, (see timber management page) consider selling. Vacant rural land is both an on-going expense, in the form of property taxes. (Note that currently you can sell the surface and retain the oil and gas rights, without taxation on those rights ) and exposure to potential liability. Use the tax laws to your advantage. The sale is, most likely, a capital gain, so it could be taxed at a lower rate, and if you want to buy different real-estate, you can defer your gain by using a section “1231 like kind exchange”,and defer your taxes altogether.
Click here for information on Timber Value.
Planting a wildlife food plot can add value to a property.
Oil & Gas: The development of the Marcellus Shale, and other shales in this region has been a life and industry changing occurrence in our operational area. To the industry this means that to compete you must be the low cost producer of a commodity that will be in abundance for years to come and you are unlikely to see much higher prices. The initial boom that resulted from the combination of high natural gas prices, and new technology is long over, and what will follow is a slow, cautious build-out of infrastructure, and measured developmental drilling. There are plenty of opportunities for the prudent operator, however. Lower acreage cost and the availability of fee oil and gas rights for sale make it a good time to come into our operational area and obtain an acreage position. To see what we can do for you, see the oil and gas section under the Land & Natural Resource Acquisition.
To the landowner, there is still a lot of money to be made, if you are in the right place at the right time. The trick then, is to know how best to profit when the opportunity arises, or to recognize that, for a variety of reasons, development is unlikely, and hedge by selling a portion of your oil and gas rights. The beauty of the unconventional shale plays as illustrated above, is that, unlike the conventional vertically drilled wells of the past, a landowner can profit with no surface disturbance at all. This is great as it eliminates the possibility that, although oil and gas wells can yield royalty, they also can have a negative effect on timber and future re-sale value of the surface. One can now eliminate the possibility of surface activity by granting a “non-development” lease that leases oil and gas, but does not allow surface activity, or build in a payment for surface use that would off-set any loss in value. Let us give you a free evaluation of your oil and gas potential, perhaps, we can work together to develop your oil and gas rights, while protecting you from potential pit-falls that have affected less informed landowners.
In old oil and gas fields where conventional drilling has gone on for many years, severed oil and gas rights are common, you must do the title work necessary to ascertain the status of the underlying oil and gas. Most landowners, even in these developed oil and gas fields still own their oil and gas, but are subject to an existing lease. Most old leases do not differentiate between deep, and shallow gas rights, and once a well is drilled, those rights are held for as long as oil and/or gas is produced. This obviously breeds hard-feelings between the landowner that is held by the existing lease, and the operator that controls the lease, that with unconventional shale development, may now be worth a fortune. The neighbors that are not held by existing leases are reaping large signing bonuses, while those held by existing leases cash small royalty checks generated by small conventional oil and gas production. All is not lost. The landowner will still receive his pro-rata share of royalties, should the lease be included in a production unit, and perhaps, share in rentals as well. Many, if not most of these old leases will need to be modified to permit unconventional shale development. Most, will need to have language added to allow the old lease to be “unitized”, or pooled with other leases. Often times, shale operators also require a “net” royalty language, so they can deduct the post production costs associated with the marketing of shale gas and produced liquids. In either event, it is a chance for the oil and gas owner that is held by the old lease to share in any monies offered to the lease operator by the unconventional driller. If everyone works together, you can both profit. We can handle these negotiations for landowner, or conventional well operators. See the Oil & Gas Section under Land & Natural Resource Acquisition.
This well, drilled under the terms of a lease signed in 1915, is never the less still valid, and holds this acreage with its on-going natural gas production.