what is the highest amount you have been offered per acre in Desoto(that is parish that has had highest offers from what I can tell)? So far from the offers I have actually seen with my own eyes I have seen $7700 per acre and that was on a 25% lease in Desoto with 1 Haynesville well and 4 more wells that were applied to be drilled but NOT permitted. That was for a 7 ac. parcel in north Desoto. (My elderly friend in Desoto sec. 19 of 15/14 still insists he was offered $19000 an ac. for his minerals in early 2017. I have not seen the paperwork but I have no reason to doubt him. That person has 5 wells paying. I told him I want to see who made the offer and he is looking for the letter to prove to me it was true).
I know others in outlying parishes who have sold $3000 an ac. I know a big factor is if the operator on section on top and bottom section is same as operator in middle. That seems to have a huge impact if someone will bid minerals. . Desoto has seen the highest price per acre (based on my PERSONAL experience)from people I know . I have friends in south Caddo and parts of Red River who can't even get an offer for minerals. . Anyone can to share info WITHOUT ANYONE'S NAMES. Even a general description like Township Range and Parish is fine
With the exception of having worthless kids or being destitute why would anyone sell right now?
I was offered $18K per mineral acre to SELL, not lease for San Augustine holdings.
Hard not to think seriously about that.....would you buy it today for the price they are offering you? If not, might consider selling.
Offers in Desoto can vary greatly as Skip accurately pointed out. I have personally seen them range from $2000/NMA with 25% lease to $25,000/NMA with 25% lease.
Factors influencing the pricing include in order of importance:
1. Lease rate
2. Visibility to, and number of any planned wells?
3. Estimated timeline for wells to be drilled on this acreage.
4. Geologic location / proximity to activity
5. Operator quality/financial condition/and how much other inventory they have to drill.
$7000 is generally a pretty fairway number for good areas of the basin if there isn't any on-going activity on the acreage.
What people should consider when they receive an offer is that in-fact holding minerals is the same thing as buying minerals. In other words, would you buy the property for the amount of cash being offered to you? If not, then you should seriously consider selling all or part. "If you ain't sellin, your buyin" is a very true phrase in all asset classes.
Also, folks should ask themselves honestly and examine their financial situation as to whether they can take the risk that they turn down the money and nothing happens. Passing on the money is also passing on the opportunity to immediately invest and/or utilize the money for other purposes. I've personally seen folks in dire financial situations turn down multi-million offers and then horrible wells get drilled on them or the area becomes condemned.
I have a friend who is trying to get over $6000 an ac. in Desoto and mineral buyers are telling her that the section she is in has different operators to south and to the north and that is affecting her lower offer. I have friends in SOUTH Caddo and NO ONE will even bid on their 10 ac. They are investors and knowledgeable about buying and selling minerals and this is first time they have seen no offers in Caddo. It seems everyone wants Desoto only and that becomes even more specific with central Desoto from T15/14 SOUTH.
The rock in South Caddo is pretty good. Not sure why someone would avoid it.
At $6000/acre (assuming a 25% royalty) an investor would have to have relatively high confidence for development of multiple new wells in a 3-4 year period. If there are factors that could make development less likely, like sections north and south being controlled by other operators, it reduces that confidence and therefore the pricing. To illustrate, if a buyer paid $6000/NMA with a 25% royalty and it took 8 years to get 3 wells, their internal rate of return would be 5-6% at best; no buyer knowingly invests for these kinds of returns.
Caddo can be a good area, but it is significantly less proven than the historical core and there is an enormous amount of drilling inventory which lends itself to the possibility of waiting many years for development - which means the potential for delay must be priced in. Without knowing the specific section, a section in southern Caddo attracting no offers might be acreage tied up in one of several bankruptcies, be a random section owned by an operator without any activity in the area, or caught up litigation. Your friends might also not be talking to every buyer active in the basin. I would encourage them to discuss with more buyers.
I agree Andrew. My friend in Desoto has 5 acres with a 1/6th lease. I told her she would be lucky to get $4000 an ac. She never gets any call backs from mineral buyers and I think it is because she wants too much. People get talking to friends and everyone has an opinion. LOL. The is 85 and no heirs. I told her just leave them to her favorite charity.
With that lease rate, it might be more like $1700-2000/acre. Also the size is so small it’s not worth most buyers messing with it. It costs just as much time and money to do a 5 acre deal as a 50 or 500 acre deal.
Charities don't want minerals, they don't like paperwork. They like cash.