Posts Tagged ‘accountant’

• Marcellus production “will enable us all to keep our farms”
  
• “Farmers are making investments in their farms that were just dreams before the Marcellus Shale”
• Marcellus development pumping “hundreds of millions of dollars into the state’s  economy”

Family farmers say Marcellus development “will enable us all to keep our farms”: “Some see it as a way to keep their farms, which have been in their families for generations. … Nor do they have concerns over the hydraulic fracturing process, which some environmentalists claim can contaminate water wells and pollute rivers and streams. “We’ve been stewards of the farms for years,” said Ward, a fourth-generation farm owner. McMurray’s family has owned its land since 1811, and Bird’s since 1821. “It will enable us all to keep our farms,” said Wright-Croft. Ward believes that farmers have the most to lose from gas drilling since they rely on private wells to water livestock as well as drink it themselves. “You’re not going to find anyone with more concerns about the water than us,” he said. (Observer-Reporter, 8/3/10)

Marcellus development pumping “hundreds of millions of dollars into the state’s economy”: “With lease payments ranging from $750 per acre to $3,600 per acre – and royalties set from 12.5 percent to 18.75 percent – the Marcellus Shale contracts Chesapeake has signed with local property owners has pumped hundreds of millions of dollars into the state’s economy. … The natural gas company presently employs 636 Mountain State residents, with plans to hire more local workers in the future once those potential employees receive proper training. Chesapeake has spent $46 million with West Virginia-based vendors so far this year, including $1 million in shops based in Marshall and Wetzel counties and several million dollars more with a company in St. Marys, W.Va. The company also donated more than $400,000 to community organizations within Marshall and Wetzel counties during the past two years, Chesapeake leaders note. (Wheeling News-Register, 8/1/10)

Marcellus bringing hope to family farmers: “As an accountant who works for many farmers in the northern tier, I have witnessed first-hand the financial stress this important industry has experienced for the past 30 years. In the past two years, I also see the hope that Marcellus Shale brings to these farm families. … Today, these farmers are making investments in their farms that were just dreams before the Marcellus Shale. Also because of these new investments by farmers, I see a rebuilding of the northern tier agriculture infrastructure that was at risk. (Daily Item, 7/28/10)

Marcellus production “good for everybody”; Helping counties “meet their bottom line”: “Marcellus Shale drilling is boosting local water sales and helping to push the Quemahoning pipeline close to its permitted capacity. Bruce Hottle, president of the Lincoln Township Municipal Authority, said the nonprofit has been selling close to 3 million gallons per month to Dallas-based Chief Oil & Gas. Drillers use several million gallons of water to “frack” each Marcellus Shale gas well. “It’s given us some decent cash flow we wouldn’t normally have,” Hottle said. “It’s probably doubled our water sales for the months of June and July.” … “This helps us get out of the hole sooner. It’s been good for everybody,” Hottle said. … As for the county, Commissioner Pamela Tokar-Ickes said the increased usage is helping them meet their bottom line. “The more water we sell the better for the Que pipeline project,” Tokar-Ickes said. “We hope it continues.” (Daily America, 7/30/10)

More new jobs on the way thanks to the Marcellus: “A partnership between Medico Industries Inc. and a South American company looks to tap into the Marcellus Shale natural gas drilling boom with the opening of a manufacturing facility in Hanover Township. … Medico Industries received a $500,000 low-interest loan through the Luzerne County Business Development Loan program to install and purchase machinery. The company is investing nearly $960,000 in the project. It’s estimated 20 jobs will be created. (Times-Leader, 7/31/10)

Marcellus-related jobs “another strong performer”: “The Pittsburgh region’s growth in all four of those sectors ranked between third and seventh best among the 40 largest regions in the country. Another strong performer was the natural resources and mining sector; although it only added 500 jobs, that was more than any region other than Houston, likely reflecting the impact of Marcellus Shale drilling. (Pittsburgh Post-Gazette, 8/1/10)

Topics like reporting leasing income, transferring leases to beneficiaries to be covered.

The temptation to just sign could seem irresistible. With a few strokes of the pen, some people in the region are being offered the chance to completely change their lives with natural gas leases.

But first, they’re warned, make peace with the fact that the next person will get more. Check the maps, they’re told, check the deed, hire a lawyer, test the water. How much environmental damage is acceptable? How about hassles to daily life?

For those not involved, think Beverly Hillbillies, minus that improbable shot, and then exchange the endearing high jinks for hours of tedious title searching, legal work and stressful decisions with lifelong implications.

So who could blame anyone for simply signing and hiding behind the wads of cash? Well, their children, for one. Because with the great benefits of gas royalties come the great responsibilities of taxation and profit allocation, and, if they’re ignored, the great headaches of the judicial system and familial infighting.

“People are just seeing the (money) as a way to pay taxes … and not thinking about having to report it to the IRS and the tax implications that could have on them … or thinking about general financial planning or investing,” wrote Donna Skog Grey in an e-mail.

Grey, who works for the Penn State Cooperative Extension in Luzerne County, says the extension has been fielding questions on gas leases, environmental issues and lessee rights. What to do with the money, however, hasn’t come up often, she noted, which is why the extension is sponsoring workshops on what to do after the lease is signed but before the money rolls in.

One is planned for Lake-Lehman Junior/Senior High School on Aug. 25.

“There may be some strategies available to reduce the income tax,” said Dale Tice, an attorney with Greevy & Associates, a Williamsport law firm consulting on gas leases. “That’s something they would want to work out with their accountant or financial advisor prior to receiving the payment.”

The workshop will cover various topics, including how to report leasing income – the cash bonuses are just like regular income – transferring leases to beneficiaries and investment options.

“Certainly the cash-bonus payment is an issue,” Tice said. “It could push somebody up into a higher tax bracket. … You’re looking at a large potential tax hit, and without using the strategies that are available, you’ve got issues (in the event of) divorce, creditors.”

To add to confusion, there are health-care implications with elderly lessees who are currently eligible for Medicare or Medicaid, he said.

He noted some families are creating limited-liability companies to distribute the proceeds, and that family limited partnerships can make dividing up ownership of the lease similar to issuing stock.

“Really, the issue here is providing governance, keeping the parents in control of the resource while they’re alive, but at the same time providing for an orderly and easy shift of equity to the next generation,” Tice said. “I don’t think that you have to have it necessarily worked out before you receive your cash-bonus payment, but certainly there’s no disadvantage to thinking about these issues earlier rather than later.”

If you go

A natural gas-leasing workshop entitled “Managing Natural Gas Lease and Royalty Income” is scheduled for 7 p.m. to 9:30 p.m. Monday, Aug. 25 at the Lake-Lehman Junior/Senior High School. The cost is $10 per person. To make reservations, call the Penn State Cooperative Extension at 1-888-825-1701.

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader