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THE FINANCIAL & TAX IMPLICATIONS OF OIL & GAS LEASES IN OHIO

Extension Education

David Marrison
Professor
The Ohio State University
Coshocton

Abstract

\r\n Oil & gas exploration has hit Eastern Ohio with a flurry during the past year as oil companies are leasing the Marcellus & Utica Shale mineral rights for up to $6,000 per acre. This leasing activity has the potential to provide landowners with substantial revenue.  An important consideration for landowners who receive bonus payments or royalty income is how to manage the tax implications from this new revenue stream.  OSU Extension developed two educational outreach initiatives to address the emerging tax and financial questions.  Topics included taxes associated with oil & gas leases, what IRS forms to use to report income and expenses, how to calculate depletion, and strategies for reducing tax liability.  During the fall of 2011, the teaching team taught 466 tax professionals at eight different sessions on oil & gas lease taxation as part of the OSU Income Tax Schools.  Thus far in 2012, the team has offered eight meetings reaching 339 landowners owning 23,897 acres.  Ten additional meetings are scheduled for landowners in the upcoming months. The landowners who attended the 2012 workshops reported mean knowledge gains between 1.74 and 2.01 on a 5 point Likert scale.  The landowners also reported the following anticipated actions for 2012: 78.9% plan to meet with a tax accountant; 69.7% will meet with their lawyer; and 68.1% plan to sign an oil & gas lease.

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Poster has NOT been presented at any previous NACAA AM/PIC

This poster is being submitted for judging. It will be displayed at the AM/PIC if not selected as a State winner. The abstract will be published in the proceedings.

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Authors: D.L. Marrison, C. Bruynis, B. Ward
  1. Marrison, D. Associate Professor, Ohio State University Extension, Ohio, 44047
  2. Bruynis, C. Assistant Professor, Ohio State University Extension, Ohio, 45601
  3. Ward, B. Assistant Professor, Ohio State University Extension, Ohio, 43210