(08/26/2009)
Drilling rights: Group seeks to help oil and gas royalty owners When oil and natural gas companies moved into West Virginia to drill in the lucrative Marcellus shale formation, many landowners were caught off guard.

By Eric Eyre
Staff writer
wvgazette.com

Charleston mineral appraiser Robert Hart has helped
start an Appalachian chapter of a national group that
represents oil and gas royalty owners. Courtesy photo

When oil and natural gas companies moved into West Virginia to drill in the lucrative Marcellus shale formation, many landowners were caught off guard.

They were rushed to sign leases they didn't fully understand, said Robert Hart, a certified minerals appraiser. Some had questions that weren't answered. Others found out that nearby landowners were receiving much larger signing bonuses.

"They were often finding out that their neighbor who signed just a few days or weeks later were getting better deals," said Hart. "There was frustration and confusion. They realized maybe they weren't getting the best deal after all."

To help end the confusion and educate mineral rights royalty owners, Hart and other oil and gas professionals recently started an Appalachian chapter of the   National Association of Royalty Owners.

The Appalachian group, which represents mineral owners in West Virginia, New York, Kentucky and Pennsylvania, already has about 100 members, and Hart hopes to recruit many more.

He estimates that thousands of royalty owners live in West Virginia alone.

"I felt for a long time, we should have a chapter here," said Hart, who has belonged to the national organization for 15 years and also serves as the president of the Appalachian chapter. "We are the birthplace of the oil and gas industry. We have lots and lots of activity here."

On Aug. 29, NARO's Appalachian chapter plans to hold a seminar for oil and gas royalty owners at the Knights of Columbus Hall, 379 North Parkview Drive, in Morgantown. The three-hour seminar starts at 1 p.m.

Speakers include: Jerry Simmons, NARO's executive director; Lee Avery, senior geologist with the West Virginia Geological and Economic Survey; and Steve Shuman, a lawyer who represents royalty owners.

A second seminar will be in Lexington, Ky., on Oct. 31.

"They are excellent opportunities for existing royalty owners or for those contemplating signing a lease to learn what to do and what not to do," Hart said.

For landowners approached by gas company representatives, Hart offers this advice: Study the contract before you sign it.

"Everything is negotiable," he said. "Landowners are entitled to ask questions and request terms that suit them. They also should have a reasonable time to think things over before they sign a lease."

Hart said oil and gas companies accelerated the Marcellus shale development last year as natural gas prices spiked at $13 per thousand cubic feet. Prices have dropped to $4 mcf.

The gas companies also started drilling horizontal wells - rather than vertical ones - which vastly increased production.

The Marcellus shale formation, which stretches from New York State to Southern West Virginia, is one of the richest natural gas basins in America.

"It's a hot item," Hart said. "It may contain half of all natural gas in the continental U.S."

Many companies have hired subcontractors to sign leases with local landowners to drill wells on their property.

"Some of these people flat out don't know what to do," Hart said. "They receive contracts with terms and clauses they don't understand. The confusion builds into frustration and anger in some cases."

Hart said his group isn't against the oil and gas companies.

"We look at the producers as friends and partners in a common effort to get more wells drilled and produce more income," Hart said. "Part of our role is helping the companies get their information out. Our members share many issues with the producing companies and seek many of the same end results."

Hart also said the Appalachian chapter will keep a close watch on state policies that effect royalty owners, and educate state and federal lawmakers about any changes.

An individual membership in the NARO's Appalachian chapter costs $105 a year. Members receive a monthly newsletter and copy of a book titled, "Look Before You Lease," free admission to regional workshops and networking opportunities with fellow royalty owners.

NARO has 2,300 members nationwide. Texas and Oklahoma have the group's largest chapters.

"We need to inform and educate our members," Hart said. "There's a tremendous absence of information and understanding out there, and we're here to help."

Reach Eric Eyre at ericeyre@wvgazette.com or 304-348-4869.

wvgazette.com


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