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Permalink Reply by ledlights on October 22, 2013 at 6:17

Jennifer,

You are currently receiving $1000-$1200 a year. If gas prices stayed the same and no new wells are drilled then their offer is equal to what you would receive in 6-8 yrs (or somewhat longer) of royalties (but this depends on many factors not the least of which what kind of wells are producing and where they are in their production life). If gas prices go up then you could receive that much in a shorter period of time. How much room for more wells is left in the unit producing your royalties? Are there prospective pay zones in your property at depths that are currently not being produced? Will you retain mineral rights at other depths that were protected by depth clauses in your existing lease? I consider the offer of virtually no risk on their part just based on current production and I am not impressed by the offer. The least you might do is shop around for a better one. If you need cash very badly then that is obviously a factor to weigh. You also have the option of selling a % of your rights and retaining some. Please do a search on gohaynesvilleshale.com (top right hand text box on these web pages) - type in "should I sell" and click the Orange Search button - which I believe will bring up some past discussions about this kind of decision, mineral valuations and other topics that you may find worthwhile.

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Permalink Reply by Andrew on October 22, 2013 at 14:49

Speaking very generally, an offer of 60-72 times current monthly royalty is right at or slightly higher than average, so is arguably "fair." Of course, even if an offer is a fair one there are still a number of factors to consider before determining if accepting it is in your best interest, as Ledlights points out.

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