landowner

Lincoln and Bienville Property

Hi, I'm wondering if anybody can tell me anything about the situation in Lincoln or Bienville Parish. My mother recently received an offer to purchase her mineral rights for property in Bienville Parish. They are offering $6500 per net mineral acre and I'm wondering if anyone knows if this would be a good deal? My mother has held on to this inheritance her entire adult life hoping that it will produce (she has a lease on this property that just expired in September) but she is really in need of money for retirement and I'm thinking this may be her only chance to benefit from this property. Any thoughts?

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landownerPermalink Reply by LBarton on November 11, 2015 at 3:47

She has been signing leases on the Bienville property. The letter referenced a lease for the Lincoln Property and she is unaware of a lease on any of the Lincoln Property.


landownerPermalink Reply by Max on November 12, 2015 at 5:07

LBarton, you asked if the $6500/acre was a "good" price.  That would depend on several things.  First of all, I would assume that the $6500 is for 1/4 of the royalty acres, not all of the minerals.

1 mineral acre = 1 royalty acre with a 1/8 (12 1/2%) royalty lease; 1 mineral acre = 2 royalty acres with a 1/4 (25%) royalty lease.  10  mineral acres with a 1/4 royalty lease = 20 royalty acres. 

In the recent past, I've had offers of $1500 to $2000 for 1/4 of my royalty acres (no producing wells in unit) and after checking with a good source, I found out there were offers as high as $12,500 for 1/4 royalty acre.  Those offers were located in producing units (Lincoln Parish) and ran from around $7500 to $12,500.  With a non-producing unit, and the possibility of no well ever being drilled, $2000 could be a good deal.  On the other hand, a well could be drilled and pay me 100X of what I could sell today.

Offers like that would be hard to not look at when the Oil & Gas industry is up and down.  Cash in hand is real.  Cash coming next year from a well is not always a sure thing.  You have to look at your needs now and see where you need to go.

It sounds like you need a professional to help you sort things out.  This site will give you a lot of information and advice.  It will help you move forward with whatever you and your mother decides. 


landownerPermalink Reply by LBarton on November 15, 2015 at 11:14

Thank you. I think we are going to do that. This is all very new to me and even just trying to find out which property belongs to her and which is leased, etc. is quite a headache, much less, what the property is worth. 


Oil & Gas ProPermalink Reply by Barnburner16 on November 17, 2015 at 10:10
LBarton,

LBarton,

I sell minerals and royalty all the time. Like max said, the location, prescription possibilities, and lease royalty burdening the minerals are Huge determining factors in the value. My advice would be to consider 2 scenarios, or opportunities.... and determine which of the two would be more detrimental to your mothers financial situation.

Scenario #1) you decline offer, keep minerals, and no well, or worse, a poor producing well is drilled on the minerals and you make very little or no income from royalty/minerals.

Scenario #2) you accept cash now and a good well or wells are drilled. Years later and after much evaluation, you realize that had you kept your minerals, you would have made more money from royalty income over the long term.

Hope this helps,
JR Mabry

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