Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on August 9, 2023 at 5:48

Russ, it's a low ball offer.  Your section and the ones to the immediate north and south, all operated by Chesapeake, will need new wells in the foreseeable future,   All three unit wells were drilling in 2011 and the production is getting low.  I'd say Chesapeake will look to drill wells covering those sections in 2024.  Before they do, you will receive a notice letter for Chesapeake's application to the state for the spacing of those new wells.  When that happens you'll get more offers and they will be higher.  When Chesapeake applies for permits to drill for multiple wells in those sections, you'll get more offers and they will be higher.  I suggest you sit tight.

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Permalink Reply by Russ Michaud on August 9, 2023 at 5:51

Thank you so much!   I was thinking of sitting tight but really appreciate your confirmation!

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Permalink Reply by Les on July 26, 2023 at 7:25

Lawrence, We also own mineral rights in DeSoto Parish, Section 25, 15N,12W and I would echo Skip's comments that that area has tremendous potential. While last year's royalties from that section were modest, like you, we are getting numerous offers to buy our mineral rights. That suggests to me, unless you need the $ now, hold out for higher NG prices and you will be rewarded!

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Permalink Reply by Lawrence Silver on July 26, 2023 at 9:48

Thanks. With the information I've received, that's what I plan to do.

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Permalink Reply by Jimmy Hamiter on July 26, 2023 at 12:29

Hi Lawrence. I'm also in the Spider field (Sec. 32, 12N, 14W) covering 40.762 total acres, of which I split one-half ownership with my sister. Last fall, we each got an offer that would total $400K ($200K each) not long after Comstock got a Field Order to drill 5 cross unit lateral wells that cross our property, as well as Section 5 and Section 29 (yet to be permitted). That's only one section. You're in a bigger catbird seat. And we don't plan to sell. Interestingly, despite the price of gas I've gotten calls from 3 or 4 other companies in the past couple of months about buying. Just sharing.

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Permalink Reply by Lawrence Silver on July 27, 2023 at 2:09

Thanks for the information. I'm going to hold on. The upfront money looks good, but like your property in Sec 32, you'll make a lot more when Comstock drills.

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Permalink Reply by Skip Peel - Mineral Consultant on July 27, 2023 at 2:17

The value of minerals increases when new wells are imminent especially with Haynesville/Bossier horizontal wells that are drilled in groups (2-5).  Every time this occurs is an advantageous time to sell.  The advantages of selling minerals are generally two fold:  the lower tax rate (long term capital gains are 15% or 20% depending on the sales amount and the filing status of the seller) and the time value of a dollar.  For those with the majority of their wells in the future, it is a reasonable course of action to sell a portion of the mineral right every time a new group of wells is imminent.  My advice to clients is to consider a long term liquidation plan that prioritizes net sales proceeds over time while avoiding the potential for stranded assets.

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Permalink Reply by Jimmy Hamiter on July 27, 2023 at 3:08

Thank you, Skip. Great advice as always!

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Permalink Reply by Skip Peel - Mineral Consultant on July 27, 2023 at 3:13

You're welcome, Jimmy.

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Permalink Reply by Jimmy Hamiter on July 27, 2023 at 3:13

My pleasure.

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Permalink Reply by Steve P on July 27, 2023 at 14:25

with gas prices at their current (dismal) level, I’m surprised at how routinely I or a family member gets contacted about selling our mineral rights.  so far, we’ve politely declined all of the offers.  From unit filings, I have 3 more wells on the horizon.  Hopefully, they won’t be drilled in the next few months because, like most of us, I’m hoping (assuming) that the price of NG will be better next year.  One way I look at this is that as long as people keep calling me wanting to buy my minerals, then my holdings are valuable, and thus worthy to hang on to.

Of course, when they stop calling, that means it’s too late, and I missed the boat.

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Permalink Reply by Skip Peel - Mineral Consultant on July 27, 2023 at 14:50

Through out the history of the Haynesville Shale Play, offers to buy minerals have remained constant.  Even in the depth of the worse price months, offers keep coming.  Offer amounts may be informed by lower nat gas prices but not necessarily.  I've seen some offers this year that were as high as those in 2022. There is plenty of well control to inform perceptions of localize rock qualities and improved frac techniques have improved per well performance.  Yes, public record evidence of new wells in the pipeline brings offers targeted on those sections but there are plenty of sales occurring that do not fit that definition.  For those who are charged with managing mineral assets, we are coming to the point in development where the level of undeveloped, recoverable reserves are becoming a factor.  Especially in northern units with no economic Bossier and high levels of development.  For those mineral owners, there will come a day when their minerals are not seen by mineral buyers/investors as a good long term investment.  It is worth keeping in mind that these wells produce 75% to 80% of their life time production in the first 24 months.

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