Wednesday, May 22, 2013
Fracking continues to kick-up property issues:
The practice has its roots in the early days of the drilling boom, when companies from around the world began leasing land as fast as they could -- locking the property into five-year deals that kept competitors at bay. Then, as drilling picked up, the increased supply of natural gas led to a record-setting drop in prices.
Suddenly, it wasn't as easy to turn a profit on a well. Many companies pulled out of neighborhoods where rigs had been planned, leaving those leases behind in the process. That left many landholders unsure when -- if ever -- they'd see a well on their property that would bring a steady stream of royalty checks with it.
The investment firms moving into the region are offering to buy those left-behind mineral rights. Landowners get money for that vacation home today, and the investment firm gets access to the royalty payments that may -- or may not -- come later.
If there's one word associated with the practice, it's risk -- risk for the company that might acquire useless mineral rights, and risk for the landowner who could miss out on lucrative royalty payments in the future.