Babst Calland: Gateway Royalty to Pay Utica Shale Landowners for Rights to Future Royalties

By Jason M. Zoeller

Gateway Royalty, LLC, a royalty acquisition company based in Carrollton, Ohio, has raised $58.5 million to pay Utica shale play landowners for rights to their future royalty payments. Gateway’s goal is to invest in a broad range of oil and gas royalties across the eastern Ohio counties, which constitute the core of the new Utica shale play. It is a business model with a risk for both sides. The lump-sum payment could easily be bested by solid production. Conversely, it’s difficult to tell exactly how much oil or gas will come from a specific well, so it’s possible that the company could lose out.

Gateway, originally based in Texas, is willing to take the risk. The company moved to Carrollton in May 2012, investing $35 million on 20,000 acres. Those initial investments focused on the northern part of the play in Columbiana County. The new investments will move more toward the south but will continue Gateway’s policy of acquiring a diversified portfolio of oil and gas royalty interests without incurring any debt.

Copyright 2014 • Babst, Calland, Clements and Zomnir, P.C. • Two Gateway Center, Pittsburgh, PA 15222 • 412-394-5400 • Administrative Watch is privately distributed by Babst, Calland, Clements and Zomnir, P.C., for the general information of its clients, friends and readers. It is not designed to be, nor should it be considered or used as, the sole source of analyzing and resolving legal problems. If you have, or think you may have, a legal problem or issue relating to any of the matters discussed in the Administrative Watch, consult legal counsel.

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