Mineral Value

3 months ago, I sold a portion of my mineral interest. Prior to the sale, there were no producing wells within a 2-3 mile proximity of my minerals. This made it difficult to determine a mineral value. However, since that sale, there have been 3 very large wells(25-31 Mmcfd) reported around me. Im, again, considering selling a small portion of my mineral interest. Yes, Im aware of the long term value of minerals, but my question is this: Is there anything that could happen, at this point, to either increase or decrease the value of my minerals? Obviously, the mineral value went up, significantly, with the IP reports of the new wells around me. Would the immediate value, of the minerals, continue to rise with the reports of more wells in the 25-31Mmcfd range? Would their value decrease with new reports of lower producing wells? Or will their value remain, somewhat, constant just based on these new large producing wells around me? Thanks for your input!

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Permalink Reply by The_Baron on August 30, 2010 at 5:22
Really old guy,

The term for expiration of the royalty sale will depend on the terms in the royalty deed. However, royalty is subject to a ten year prescriptive period.
Permalink Reply by adubu on August 30, 2010 at 6:06
Baron I think when you are talking about the 10 year prescriptive period you thinking La. law---ROG's Minerals and my minerals are in Texas. The mineral right owner under texas law owns minerals forever unless they are sold or not reserved on sell of land then they would go with the land.
Permalink Reply by reallyoldguy on August 30, 2010 at 6:12
Baron, I dont believe the 10 year prescriptive applies to TX minerals?
Permalink Reply by adubu on August 30, 2010 at 3:27
Baron---if your minerals get HBP then selling royalty is it not basically selling the minerals because we all know of old leases HBP> 50 years and still counting. I guess what you could do would sell only the formation that is producing with basic pugh clause or sell only the royalty in present wells in unit but reserve all future wells not drilled to date of sell.
Permalink Reply by The_Baron on August 30, 2010 at 5:21
What????


Selling royalty allows you to retain the mineral rights. The royalty is simply the future revenue derived from the sale of any minerals. You can sell royalty at any time, even when there is no production. The mineral code provides that royalty will prescribe, in a similar albeit slightly different manner as a mineral servitude.


If you retain your minerals, but sell royalty, you retain the rights to lease. You simply will not receive all the royalties from production (depending on the amount you sell, you can retain some royalty, sell an 1/8 etc....) However, you would receive rentals, lease bonuses and other such payments. More importantly, you are the one making lease decisions... insuring you have the lease stipulations you need.
Permalink Reply by jffree1 on August 30, 2010 at 7:52
"The mineral code provides that royalty will prescribe, in a similar albeit slightly different manner as a mineral servitude."

Baron, I have the highest regard for your opinion. I just wanted to point out that, while adubu may have minerals in La., you are mostly addressing Texas in this discussion, I believe, so prescription would have no bearing over here. Anyone not familiar with the differences in mineral codes of the two states might be easily confused.
Permalink Reply by adubu on August 30, 2010 at 8:10
jffree1---thanks to clarify ,but I think you mean I have minerals in Texas and baron is addressing La. so prescription would have no bearing on this discussion since it(the discussion) is mostly addressing Texas. I wish I had some minerals in La. also, but no---thanks for comment :)
Permalink Reply by jffree1 on August 30, 2010 at 8:48
Thanks, adubu, but I said what I meant... I was not sure if you had minerals in La. so I said you "may" have some as in "it's possible but I don't know". I coulda left that out entirely, though, I suppose. I knew we were addressing Texans.
Permalink Reply by adubu on August 30, 2010 at 8:56
jfree1--- thanks
Permalink Reply by The_Baron on August 30, 2010 at 8:14
oops, my bad I didn't realize i strayed into a texas discusion, you guys should label these better.
Permalink Reply by adubu on August 30, 2010 at 8:31
Baron---come on over We can make a Texan out of you. The Sabine River has bridges so you do not even have to swim and or get wet. Hope your headacre is better :)
Permalink Reply by reallyoldguy on August 30, 2010 at 8:39
Thats ok, Baron. We dont hold the fact that your not a Texan against you! At least you're not an "Okie"! We're always glad to have your expertise.

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