Highlighted in the recent film “Promised Land,” shale production in certain areas of the United States has provided landowners with both opportunity and hardship. Negotiating land leases with large corporations has not been easy for many Americans who are being courted by the likes of Royal Dutch Shell PLC and Exxon Mobil Corporation. Given the location of Fort Pitt Capital Group in Western Pennsylvania, we have seen our fair share of clients approached by and negotiating with these gas companies. I personally faced this situation with my family’s farmland not too long ago.
A recent Financial Advisor magazine article from the October issue features insight from advisors who work with landowners leasing their land for drilling. I was asked to contribute my insight based on the work I have done to help our clients negotiate a fair lease and then properly manage the resulting income. You can read the entire digital version of the article through the following link and an excerpt from the piece is included below – “Drilling Deeper.”
“Patten emphasizes to clients the importance of putting a financial plan in place and not changing one’s lifestyle immediately. He also encourages them to focus on the fact that well production has a limited life span—often eight to 10 years, he says. ‘If you’re fortunate enough to get wells, you will have a nice income stream, but it’ll stop or trail off dramatically,’ he says. ‘Don’t squander the windfall. Create a portfolio that can produce an income stream in perpetuity.’”