Posts Tagged ‘investment adviser’

Property owners hear about some of the financial complications involved with gas drilling agreements.

Although planning for what to do with gas-lease profits is a problem most people wouldn’t mind having, landowners likely aren’t eager to add paperwork to the already document-laden gas-leasing process.

Experts, however, say protecting the wealth is the same as accumulating it in the first place.

“I’ve seen some horror stories, and if it means going to an attorney and paying a few dollars, it’s worth it,” said Ronald Honeywell, a trust officer with Luzerne Bank who spoke at a seminar on the financial implications of gas leases on Monday evening at Lake-Lehman Junior-Senior High School.

Past seminars on leasing have packed the school’s auditorium, but Monday’s seminar on taxes and investing attracted perhaps 50 people. Presenters admitted that financial topics aren’t often looked forward to but are important nonetheless.

Of particular interest were leasing’s tax implications, such as drilling’s effect on county Clean and Green tax abatement programs. Michelle O’Brien, an attorney with Rosenn, Jenkins & Greenwald in Wilkes-Barre, said drilling would roll back seven years of abatements.

“It’s only fair that the oil company pays that price because they’re the ones kicking you out of Clean and Green,” she said.

However, she pointed out that the company’s payment would likely be a reimbursement, meaning the landowner should be prepared to pay the penalty.

“It sounds like a simple concept, but the money could be a lot of money,” she said, perhaps up to $100,000.

O’Brien also pointed out leases allow landowners to retain control over the location of pipelines and other infrastructure because the property’s marketability could drop depending on where such things are placed.

Even with legal exemption clauses, landowners should retain liability insurance, she said, to cover situations not directly caused by the drilling processes, such as all-terrain vehicles crashes or youths getting hurt on the equipment.

Robert Lawrence, a certified public accountant, explained that the royalties and sign-on bonuses are passive income, similar to rental income, which means they can push landowners into higher tax brackets and impact Social Security or Medicare payments. He suggested that people receiving royalties discuss paying installments on the estimated taxes.

Passing the wealth along creates its own pitfalls, noted Lee Piatt, also with Rosenn, Jenkins & Greenwald. Financial planning and distribution of the proceeds through family corporations or other outlets can avoid some of that, he said.

While it can cause headaches, the increased tax burden can also make some investments more enticing, said Arthur Daube, an investment adviser with Park Avenue Securities. Though their return is low, municipal bonds are tax-free by law, he said, so they can act as havens for profits.

O’Brien also pointed out leases allow landowners to retain control over the location of pipelines and other infrastructure.

Copyright: Times Leader

Gas-drilling leases negotiated in Wyoming County, not coming as quickly here.

TUNKHANNOCK – While Wyoming County landowners are heavily involved in the regional natural-gas boom, almost all Luzerne County landowners are out of luck, at least for now.

“It’s not always fun. There’s going to be some angst, there’s going to be some anxiety,” said Jack Sordoni, who heads Wilkes-Barre-based Homeland Energy Ventures LLC.

Energy companies and geologists have estimated for decades that billions of dollars of natural gas is locked in a layer of rock called Marcellus Shale that runs about a mile underground from upstate New York down to Virginia, including the northern tier of Pennsylvania. Only recently have technological advances and higher energy prices made extracting the gas financially feasible.

Speaking during a meeting Wednesday evening at the Tunkhannock Area High School, the Harveys Lake native said oil companies aren’t yet interested in crossing the county border. He said his family’s land in Wyoming County has been leased, but companies have refused to consider contiguous land across the county line.

However, Chris Robinson, who is brokering leases in Wyoming County for nearly $3,000 per acre and 17 percent royalties, said he’s already leased the western edge of Fairmount Township in northwestern Luzerne County.

Sordoni added that Dallas, Lake and Franklin townships are areas “Chris and I are hearing (about) repeatedly” and are “still very much prospective and in play.”

Luzerne County landowners anxiously awaiting a lease offer probably won’t have to wait long for an answer. Robinson, who’s from Allegheny County, said he planned to continue negotiating leases in the area until the gas companies are no longer interested.

“I don’t think it’s going to take that long. It’s measured in months at most,” he said.

The wait might, however, offer local landowners examples to consider. Unlike other land groups, the Wyoming landowners rolled all their concerns into the lease instead of adding addendums.

“The difference is this is our lease. This is about us,” said Chip Lions, a member of the group who’s now doing lease work.

The meeting was sponsored by Stone House Wealth Management LLC, a Montrose-based financial planning firm that’s advising landowners and selling them investment portfolios. The company, which started the www.nepagas.com Web site, got involved a while ago “because we saw where this was going to go,” said John Burke, an investment adviser with the company.

The good news, Robinson said, is that he can get leases for any property within the companies’ interested regions, no matter the size.

“I can’t tell you how many I’ve signed for 1 acre or less,” he said.

Additionally, he said that while some gas companies might honestly stop leasing, other companies new to the area desperately want in on the drilling rights. And, he said, they can check for clear land titles within five days, contrary to the three months they tell most land groups.

For landowners concerned about environmental problems, he said state agencies are good at watching drillers, noting his own enforcement experiences.

He warned, however, to not go it alone.

“The mass of ground gets people the best deal, period,” he said. “People who break away, you may be penalized and you may be penalizing your neighbors.”

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

Copyright: Times Leader