Can You Profit from Utica Shale Gas Exploration?

Oil rigg drilling on vacant landThe largest new discovery of natural gas and oil in America lies in the Utica Shale. The Utica Shale stretches from Ontario in the North, through upstate New York, Pennsylvania, Ohio and West Virginia in the South.

Exploration companies are already securing land rights and leases to exploit this huge economic opportunity. Some exploration companies, such as Chesapeake Energy have reported impressive results of their initial wells.

The State of Ohio is still drafting regulations on how companies may drill and get the gas and oil out of the ground. While governor Kasich is a strong supporter of Shale exporation, environmental groups are opposed. The Ohio EPA is still studying the impact of the controversial fracturing process on ground water and the environment.

With the strong demand for cheap energy I am pretty sure the Utica Shale will be exploited. And this will create a bonanza for the States and communities where gas and oil companies settle in.

You probably wonder how a land owner or investor in acreage for sale can profit from the Utica Shale gas exploration.

There are 2 main ways for investors: You either own land that you lease to an exploration company or you provide services that the companies or their workers need.  You also could drill yourself, but that’s a topic I can’t cover in this post, as it requires extensive experience in oil and gas exploration.

As a land owner I recommend you check, if your vacant land is actually located in the shale. You can use these maps of the Utica Shale, or go to the websites of the Ohio Department of Natural Resources or the Energy Information Administration.

Most of Eastern Ohio is either in the Utica or Marcellus Shale.

If you own land in the Utical Shale you can lease the mineral and exploration rights to an oil or gas company. Many land owners were probably contacted by Oil Companies planning to drill in the area. One of my friends owns more than 80 acres in Guernsey County. He was offered $2,000 per acre for a 5 year lease. There would not be any drilling directly on his property, just horizontal drilling underneath.

Based on an article by the Utica Shale Landowner’s Group this seems low. It appears that the price of mineral rights in some Counties are already above $4,000, with speculators estimating that it could go as high as $9,000 per acre.

Before you sign any lease or sale agreement of your mineral rights, you should consult an experienced attorney. Selling the mineral rights now, will limit the amount of money you can make from your vacant land in the future. Instead, you should lease the mineral rights for a period of time. If they find oil or gas you will receive royalties.

In Texas, which is ahead of Ohio and other Utica Shale States, royalties are 25% of the oil or gas produced. In Ohio royalties are just 12% – 15%, but that number will increase as the market heats up.

An other way to profit from the coming gas boom in Ohio and other Shale states is to provide services to the industry. Experienced real estate investors have profited from providing housing to the the industry, such as apartments for the workers.

It has been estimated that more than 200,000 jobs could be created in the State of Ohio alone. This will require lots of additional housing in communities that have not been part of the recent housing boom.

We see opportunities for developing apartments and single family housing in these communities, as well as stores, shopping ccnters, offices and storage.

How do you find the best place to develop housing?

Read reports of the major exploration companies. They are all public and they publish lots of information on where they are drilling successfully.

This may be the opportunity of a life-time, if you own land in the Utica Shale or are ready to invest in real estate in the Shale area. It could create a boom that will easily wipe out all the losses of the housing bust of the past few years.

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3 Responses to Can You Profit from Utica Shale Gas Exploration?

  1. david t weir says:

    i own 10 acres in lorain co. ohio on the utica marsellus shale area looking for buyers for the leases i know theres gas down there we get it bubbleing up from the old water wells at times. contacted me by phone 1 440 506 3789 or email duckmandave59@aol.com if interested thanks dave

  2. Chad says:

    My family owns about 300 acres in Northern Adams County. Maps are mixed when it comes to where the shale plates are positioned. I am wondering if there are any exploration or plans for drilling in our region?

    Thanks,
    Chad

  3. Kurt Novak says:

    Chad,

    Here is a link to a map showing all permitted and active wells in the Utica Shale in Ohio
    Ohio Utica Shale Wells

    It seems like Adams County is out of that area.
    The best place to find information about all Ohio drilling activities is
    ODNR’s Website.

    Regards,
    Kurt Novak

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