Farmers Hit the Jackpot in Kansas Oil Boom

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By Blake Ellis

Farmers in Kansas are hitting the jackpot.

But instead of holding the winning lottery numbers, it's all about owning the right piece of land.

In Harper County, Kan., and the surrounding areas along the south central border of the state, oil companies are pinpointing plots of land they think will become drilling hotspots and offering farmers up to $1,250 an acre for the mineral rights that allow them to drill there.

Only a year ago, these same rights were worth about $25 an acre, said Gordon Stull, a lawyer in the town of Pratt, who helps clients negotiate mineral right leases.

With a knock at the door, many local farmers who have been sitting atop their mineral rights for decades are suddenly seeing their lives change forever.

John Walker, a 63-year old farmer who has been harvesting wheat in the small town of Anthony since he was six years old, has received $1.5 million over the past year after leasing out mineral rights on 2,000 acres of his land.

Walker received $550 an acre for leasing out half of them last year, then received $1,000 an acre for the other half this year. He will also get royalty payments of 20% from any oil that is produced on that land.

"I've had to pinch myself every morning just to know I'm awake ... we've kind of hit the jackpot," said Walker.

With the new money, Walker went straight to the John Deere store and swapped some of his old farming equipment for two new tractors, a baler, a swather and two pickup trucks. He also bought a luxury motor home, so that he and his wife can start taking a few vacations. But he won't be quitting his day job any time soon, he said.

Mineral rights grant access to the materials beneath the land. So farmers are still able to farm the land above the minerals that they lease out. If a well is drilled, however, they will no longer be able to farm on the portion of land where it is located.

Jack Gates, a 64-year old farmer who leased out 160 acres of his mineral rights for $1,000 an acre, may not have earned a life-altering sum but the $160,000 he received will help him retire more comfortably.

Previously, Gates had struggled to save for retirement. The cost of fertilizer kept climbing as prices for wheat, his big crop, kept falling. He believes that God was responsible for this recent stroke of good fortune, and he doubled his regular contributions to his church as soon as he received his check -- in addition to paying off several small loans and putting more than $10,000 toward his retirement savings.

"Without this money, my retirement would have been on faith that the Lord would have provided for me somehow," he said. "It's just a blessing that we're able to participate in the oil boom going on in Harper County." Read more at CNNMoney:


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112 Comments

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bungusderwiliger

Sounds like a bunch of ********.

June 01 2012 at 5:48 PM Report abuse rate up rate down Reply
IRVING

It's amazing, how many resources are found in the U.S. when the price of oil hits $100.00 a barrel.

May 29 2012 at 5:38 AM Report abuse rate up rate down Reply
texcal48

The speculators leased the mineral rights typically for 25 -50 - 100 year leases for the off chance that there was oil or gas on their land. Those Leases pay whether they drill or not. now if they do drill the land owner stands the chance of recieving royalty checks if the well produces for as long as the well produces based upon a predetermined percentage per barrel or cubic foot produced and that is something that can and will be passed on to any and all heirs.
Now I'm guessing that these leases are for oil only, and that they are for designed for a specific strata because a large area of southwestern Kansas is in the Hugoton natural gas fields and I am not sure if Harper county would be in that area.

May 29 2012 at 3:54 AM Report abuse rate up rate down Reply
jimmyv2222

Wait a minute there wasn't any mention of Government helping out, how can that be? you mean private sector works without government interference ? wow what a concept. Congrats to the farmers you deserve the reward for your hard work

May 28 2012 at 11:10 PM Report abuse +1 rate up rate down Reply
1 reply to jimmyv2222's comment
mail4warding

farmers get subsidies and tax breaks; they work no harder than the rest of us.

May 29 2012 at 2:21 AM Report abuse rate up rate down Reply
ivychilde

I wish they would take a lesson from us here in Pennsylvania. Struggling people thought they'd won the lottery when gas drillers leased their mineral rights. Now they have gas wells flaring right outside their windows, they're getting sick from the toxins, and they can't sell their property, because no bank will write a mortgage on a home with gas drilling activity. And in many cases, the money was just smoke and mirrors anyway--if the well doesn't produce as promised, the land owner gets nothing. Nothing but ruined property and destroyed health. I don't begrudge the farmers the money, but I have to wonder if it's really worth it.

May 28 2012 at 11:03 PM Report abuse +1 rate up rate down Reply
1 reply to ivychilde's comment
icptba

I BET YOU DON'T EVEN LIVE THERE AND ARE JUST A TREE HUGGER FROM CALIFORNIA, OR A SOLAR WING NUT!

May 29 2012 at 5:46 AM Report abuse rate up rate down Reply
Trish

How wonderful for them..farmers work VERY hard, and now they are able to reap some extra money from their land. I am happy for them.

May 28 2012 at 10:30 PM Report abuse +2 rate up rate down Reply
Wolfie

Just remember that when you sell off your mineral rights, you have negated the value of the land! I do not buy land without mineral rights due to the fact that someone has access to the land and if need be can drill or dig right through and structure that is there after the sale.

May 28 2012 at 10:07 PM Report abuse rate up rate down Reply
1 reply to Wolfie's comment
dwiser2104

LEASE !!!! not sell

May 29 2012 at 12:24 AM Report abuse rate up rate down Reply
Etaurus9mmm

A blessings from God because of the governor took a stand and did the right thing by rejecting shari in your state.

May 28 2012 at 9:57 PM Report abuse rate up rate down Reply
kafienkarl

People that dislike President Obama love the feeling of blaming him for everything. They get off on it. It's a cultural thing for many of them. Take the Keystone Pipeline read the facts. The State Department could not approve the pipeline without proper approval that requires a certain/required amount of time. The Governor of Nebraska put the kabash on it as many ranchers/land owners don't approve of the pipeline on their land. Remember Nebraska isa very very RED state. Oil production and supply is way up. Other pipelines have been approved. What many won't/can't see is that Obama is moderate not a liberal. But the country has moved so far too the right people can't/refuse to see it. The notion that RomneyCare is the answer is wishful thinking. Romney is out of touch except for the 1%.

May 28 2012 at 9:55 PM Report abuse rate up rate down Reply
3 replies to kafienkarl's comment
Bob Moody

The plains are also prime wind turbine territory. so farmer invest some of your new wealth in wind turbines and sell the electricity to the local producer and then you can make you money from the ground, under the ground and above the ground. I will work on what is left and get back to you.

May 28 2012 at 9:24 PM Report abuse +1 rate up rate down Reply
2 replies to Bob Moody's comment
jimmyv2222

Except wind power is a money losing venture. It costs more to transport the energy a windmill produces, than the windmill actually produces, thats why people like t boone Pickens are pulling out

May 28 2012 at 11:21 PM Report abuse -1 rate up rate down Reply
2 replies to jimmyv2222's comment
cherokee1934

But as an end result we are going to have energy without depleting any resourses.

May 29 2012 at 12:00 AM Report abuse rate up rate down
krondool

I work in Wind, you're clearly out of touch

May 29 2012 at 1:16 AM Report abuse rate up rate down
wotan99

Wind energy is a great scam-it is upredictable, inconsistent, unreliable and expensive Without huge subisides, and afterward-production tax credits it would not exist. That's why after 20 years it cannot survive on its own-at it's best it's less than 30% efficient-and yes, there is the problem of getting it to where it's needed it increases the consumer's price of electricity because regular companies are forced to buy it It doesn't really create jobs, not particularly green, and many of the wind companies are actually owned by Europeans

Interesting new film Windfall exposes this for what it is

May 29 2012 at 12:51 AM Report abuse rate up rate down Reply