Pinnacle Oil & Gas royalty purchase a fair offer?
Pinnacle sent me a leter offering to purchase royalties for $12,000 for 10 years for 1/2 of 1/5 of 1/4 for 4 acres in Red River Parish. The guy at Pinnacle I spoke to says it's a good deal - of course - but was wondering what insight anyone who has followed this closely has on it. Is it a decent price?
I'm guessing they must think a well is going in there sometime in the somwewhat near future. It's in Sec 22 T12N-R9W.
Am new to most of this so any insight is greatly appreciated
I'm guessing they must think a well is going in there sometime in the somwewhat near future. It's in Sec 22 T12N-R9W.
Am new to most of this so any insight is greatly appreciated
Views: 1010
Replies to This Discussion
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Permalink Reply by ken hatcher on
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Yes, they pick their spots. Look under Sabine Parish Network at my post.
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Permalink Reply by The_Baron on -
please elaborate. what is the royalty on your lease? what is your total ownership? is the 1/2 of 1/5 of 1/4 your ownership, or is one of these your royalty?
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Permalink Reply by PN on
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I share 20 undivided acres so have 4. A company has paid us for the leasing rights, giving us money up front and we keep 1/4 of any royalty - pretty standard stuff.
Pinnacle wants to pay $12k for half of that 1/4 royalty on my 4 acres share.
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Permalink Reply by Mike Tomlin on
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The offer is not that great of an offer. You can get more, probably closer to $16k for 1/2 the royalty under the 4 acres (leased at 25% royalty).
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Permalink Reply by PN on
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How would I go about this? I spoke with one gentleman that replied here and he said might get 13k more. 16k sounds better
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Permalink Reply by Mike Tomlin on
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newbie,
I am sorry, but I can not answer your question due to GHS rules. But I know for a fact,companies are willing to pay 7k-8k per net mineral acre (leased at 1/4) for royalty interest in your area.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Permalink Reply by Spring Branch,mineral owner on
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I agree that $16,000 would be a more appropriate price
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Permalink Reply by DJG on
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Whatever decision you make, do yourself a favor and make sure that you do so from an informed perspective of knowing exactly what the true value is of the asset that you are selling and also that you fully understand the terms that you are agreeing to (including all small print and potential double-speak).
Depending upon your location, the royalty that you are potentially selling today for the price of a Kia Spectra could amount to well over hundreds of thousands of $$$ in the long run once there are multiple wells in your unit.
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