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Permalink Reply by Skip Peel - Mineral Consultant on July 19, 2022 at 4:04

Well payout is hard to tie down without the well costs which of course will remain unknown until after the wells are drilled.  These will be ~9969' laterals so well costs, drill and complete, would likely be in the $10.5 to $12.5M range per each, if things go as planned.  Ah, but there is the rub or one of them.  Mechanical problems can easily increase that by 10 to 20%.  It's rare but occasionally an operator loses a well completely. Then there is the price of natural gas once the wells are turned to sales.  Prices should still be elevated in the last quarter of 2022 when the wells go on line but the supply of natural gas is going up and will have an impact on price later this year and into 2023.  Best case scenario might be payout in 9 to 12 months but then again that's simply a guess at this point.

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Permalink Reply by billy on July 19, 2022 at 4:35

Thank you for having a go at it Skip. 

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Permalink Reply by Skip Peel - Mineral Consultant on July 19, 2022 at 4:44

You're welcome, billy.  I should have added that your hypothetical offer amount is nowhere near what you should expect.  With just what I know now as far as number of wells and timing but not your royalty fraction, I'd expect a firm offer from a trustworthy company to be in the range of $16K to $20K per acre.  Still, every time I post those current fair market value opinions, I shake my head at where offers are currently.  Reminds me of the every rising bonus offers in the early Haynesville land rush.  It is worth noting that they disappeared with no warning.  I don't expect we will see that kind of crash in Haynesville mineral values but I will not be surprised that there is some reduction in offer amounts when prices get to be in the $4.25 to $4.50 range.  The investment calculus will change.

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Permalink Reply by billy on July 20, 2022 at 3:51

Yes I agree, The chase is exciting though. I intend hanging on and taking what I get. I can confirm that I did receive an offer for $36,000 and for $36,350 per acre. It is tempting but then I realize the buyers want their share as well, why not wait and hopefully get both. Thanks to you and Skip for Knowledge and wisdom.

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Permalink Reply by john goodday on July 21, 2022 at 2:33

What companies are you receiving offers from?

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Permalink Reply by billy on July 21, 2022 at 4:39

Caddo Minerals, Cora Minerals, Greenhook Resources, Maven Royalty et al.

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