Utica Shale Play Has Already Pumped $1 Billion into Ohio

The infant Utica Shale boom has already pumped $1 billion into Ohio's economy. As recent as a few years ago a land owner could expect to lease his land for $500 per acre and receive a royalty payment of 12.5 percent of the value of the gas or oil produced from the lease. Now land owners are getting as much as $5000 per acre against 19.5 percent of output revenues as competition for leases heats up. Needless to say some lease holders are overwhelmed by their new found affluence. From the Plain Dealer;

"I was on a farm in Harrison County for completely unrelated reasons," said Mike Hogan, an Ohio State University Extension service educator for Harrison and Jefferson counties. "The farmer had a check for $1.2 million. I said, 'What is your tax management strategy? He said he would buy a pickup truck by the end of the year."

Do the math. If a farmer leases 240 acres for $5000 he would receive $1.2 million. If the well only produced a hundred barrels of oil per day and sold at $90, about the current price of WTI crude, that would yield $9000. If the farmer's share was only 12.5 percent he would receive $1,125 per day or $410,625 per year. Better still, he can still farm all but a few acres.