The Times West Virginian

West Virginia

June 20, 2010

Natural gas leases becoming popular

Profits, royalties and production rates vary for those signing on

WHEELING — Upper Ohio Valley property owners signing natural gas leases with royalty payments ranging from 12 to 19 percent may be wondering how much money they will actually gain.

With so many owners signing contracts with companies like Chesapeake Appalachia, AB Resources, CNX Gas Corp., Range Resources and others, the individual landowners may also wonder how they are supposed to track the production levels for wells on their property.

James Martin, chief of the West Virginia Office of Oil and Gas, said the drilling companies are required to report their production levels to his agency. The organization, a division of the Department of Environmental Protection, is accessible on the Internet at

“The figures we have on the website for each well are based on units of MCF,” he said, noting this abbreviation represents 1,000 cubic feet of gas.

The levels of production for each well vary greatly, Martin noted. For example, the website shows that one active Chesapeake gas well in Marshall County produced 40,160 units of gas, or MCF, in November. Given the theoretical $5 per unit price and the 15 percent royalty rate, the person holding the royalties to this well would take home $30,120 for the month.

Another Chesapeake well in Marshall County, however, produced only 357 units of gas in November. Given the same terms of $5 per unit and 15 percent royalties, this well would yield the royalty owner $267.75 for the month.

Royalty payments can also fluctuate based on the going rate for natural gas purchases. Natural gas for June delivery on the New York Mercantile Exchange, or NYMEX, have fluctuated from about $4 to $4.30 lately. A Chesapeake report shows that the company expects the price to reach $5.21 per unit by the end of the year.

Though the companies must report their results to the Office of Oil and Gas, Martin admits those drillers do not need to alert his organization of their activities until the end of a given year.

“If someone got a check from a company in June 2009, we are not going to know what the production actually was until 2010,” he said.

Wheeling attorney Robert Samol said most landowners receive reports from the companies outlining the production with their royalty checks. He said these items are typically detailed in the gas contracts.

“Every term in the contract can be negotiated. ... There is no such thing as a standard gas lease,” he said. “Even if you have a contract with the same company as your neighbor, your contracts may be completely different.”

The Wheeling Park Commission is set to gain 14 percent royalties on natural gas drilling at Oglebay and Wheeling parks, with the Ohio County Commission ready to gather 18 percent for action on its land.

In addition to the projected royalty payments, the Ohio County Commission got $3,600 per acre in lease revenue.

The city of Wheeling and the Wheeling Park Commission got $750 per acre for leases with its 14 percent royalties. All the Ohio County government entities signed on with Chesapeake.

The Marshall County Board of Education signed 177 acres over to Chesapeake for $2,800 per acre and 18.75 percent production royalties. Also, the Marshall County Parks and Recreation Board signed on with Chesapeake for drilling in Grand Vue Park at $2,900 per acre, with royalties of 18.75 percent.

Though no drilling has yet taken place in Ohio County, County Administrator Greg Stewart said Chesapeake officials have checked out some sites at both the Wheeling-Ohio County Airport and the former Ohio County Poor Farm.

Text Only
West Virginia
  • Rahal: Fund VA reform ‘for our veterans’

     On the cusp of Congress’s lengthy summer break, factions sparring over legislation to strengthen health care and funding reforms for the Department of Veterans Affairs may have reached a compromise.
    Although final details are still in the works, the top two negotiators, Sen. Bernard Sanders, I-Vt., and Rep. Jeff Miller, R-Fla., released a joint statement that said they had “made significant progress toward and agreement on legislation to make VA more accountable and to help the department recruit more doctors, nurses and other health-care professionals.”

    July 29, 2014

  • Attorney general reaches $950,000 settlement with three financial groups

    West Virginia’s attorney general has reached a $950,000 settlement with three companies over allegations of antitrust law violations.

    July 28, 2014

  • Woman convicted in teen’s slaying moved

    A Monongalia County teenager has been transferred to a state prison to complete her sentence for the slaying of another teenager.
    The Lakin Correctional Center near Point Pleasant said Friday Rachel Shoaf has been booked at the Division of Corrections prison. Shoaf turned 18 last month and had been held in a juvenile facility.

    July 26, 2014

  • Board suspends clinic operator’s license

    A West Virginia board Friday suspended the license of the operator of a pain management clinic where investigators found syringes were being reused. It was the second disciplinary action involving the doctor’s license within a decade.

    July 26, 2014

  • Candidates: Leave global warming debate to scientists

    Two West Virginia congressional hopefuls said during their first candidate forum matchup Thursday that the global warming debate is better left to scientists.
    Democrat Nick Casey and Republican Alex Mooney added that other countries should step up in reducing carbon emissions.

    July 24, 2014

  • Lawsuit filed over Dirty Girl Mud Run

    A lawsuit has been filed against the producers of a run that was canceled in Charleston in which participants were told they wouldn’t be issued refunds.

    July 24, 2014

  • WVa. man sues GM over wife's death

    A West Virginia man has filed a lawsuit against General Motors Corp., claiming a defective ignition switch in a Chevrolet Cobalt caused a 2006 accident that killed his pregnant wife.

    July 24, 2014

  • Feds commit to health studies on spilled chemical

    After largely dismissing the possibility of long-term health problems, federal officials will conduct more studies on chemicals that spilled into West Virginia’s largest drinking water supply in January.
    In the next two months, federal health officials are also heading back to West Virginia.

    July 24, 2014

  • Park Service assesses impact of W.Va. attractions

    Four National Park Service attractions in West Virginia drew a total of 1.5 million visitors last year.

    July 23, 2014

  • This weekend's 'Dirty Girl' race canceled

    Organizers of a Charleston running event that was canceled for this weekend says it won’t issue refunds.

    July 23, 2014

House Ads
Featured Ads