Gas workshop attendees urged to take time with royalty income

By DAVID THOMPSON dthompson@sungazette.com
An initiative by the Penn State Cooperative Extension to educate county residents about gas leasing and gas drilling has entered a new phase.

On Tuesday, the extension hosted a workshop on how to manage natural gas lease and royalty income.

Like previous workshops the extension has hosted in the county over the last two years, it was well-attended. At least 250 people jammed a meeting room at the Best Western on East Third Street in Loyalsock Township to hear a slate of speakers discuss investment strategies and the legal and tax implications involving natural gas windfalls.

“You’ve spent many hours working toward getting a good lease,” David Messersmith, an agent with the Wayne County extension, told those in attendance. “This is the next important step in the process.”

Cathy F. Bowen, a consumer issues specialist at Penn State, said that when it comes to managing gas income, landowners should follow the “four Ps” — pause and assess the situation; plan; pay off debts; ponder offers for professional help.

Bowen said those receiving large sums of money should immediately place the money in a safe place such as a savings account while they take time to decide what they want to do with it.

“Park it where it’s safe, then think about what you want to do with it,” she said.

Always think about the tax implications of gas income and never spend the money before you receive it, she said.

Pay off debts, especially high interest credit cards, she said.

When choosing a professional such as a financial planner to help manage gas windfall income, do your research, she said. Do not be afraid to ask for references or a list of clients the planner has worked with in the past, she said.

Interview the planner to make sure their management philosophy fits your goals and objectives, she said.

“Make sure you are comfortable with people you hire to help you handle your income,” she said.

Gordon Chase, a certified public accountant based in Tunkhannock, discussed tax issues associated with gas windfall and local attorney Lester Greevy discussed the legal issues surrounding gas leases and estate planning.

Greevy discussed ways landowners can protect the cash flow from gas leases and royalties.

According to Greevy, a limited liability company or limited partnership may be a way for landowners protect their money and pass it on to heirs.

Brian Pick, a financial advisor with Merrill Lynch and Co. of Williamsport discussed strategies for investing gas income.

Many county residents could soon receive royalty checks that “may be the single largest check you ever laid your hands on,” Pick said.

According to Thomas Murphy, education with the Lycoming County extension office, the workshop was a natural progression in an education process that began more than two years ago.

“There could be tens of millions of dollars in income from the original gas leases and substantially more than that from royalty payments once gas companies complete drilling and commercialize wells,” Murphy said.