Sell my mineral rights? Need some expert opinions.
Hi all,
I'm looking for some expert opinions. I have a producing well (Chesapeake) on 80 acres in Caddo Parish/Haynesville. It's been producing for about 5 years, but as expected, our monthly checks have declined and I anticipate they will continue to do so. I've been offered more than 300 times our current payment for our mineral rights. I've always thought selling was a bad idea, but by my economics, it would take more than 33 years to make the $ this company offering at today's monthly rates (no decline) -- that's a long time. So here are my questions:
1. Does this company know something about the future of Haynesville that I don't know, like significant oil production? I've never been contacted about oil exploration or heard anything about this.
2. What's the valuation model these companies use to provide a landowner with a mineral rights value? I have no idea if this offer is on or totally off base.
3. Does anyone have a success or disaster story relating to selling rights?
4. Anything else I should know as I consider our next step?
I'm appreciative of your feedback, thanks.
Views: 5036
Replies to This Discussion
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Permalink Reply by Katie Waterson on
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Hi Zydeco,
From what I've been told, I think the lump sum payment is considered capital gains and therefore taxed at 15% compared to our personal tax bracket/36% taxes we pay on our royalties, which can be a benefit of selling. No? Do you have a different impression of the tax implications?
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Permalink Reply by Katie Waterson on
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Oh sorry, I see now that Skip already covered this...
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Permalink Reply by kittycatmama on
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was your offer 300 x what you were getting for EACH ac. For example if you were getting $100 ac. ac in Royalties, would they pay $30000 per ac. Am I understanding this right?
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Permalink Reply by Katie Waterson on
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More like if we are receiving $1,000 a month, the offer is more than 300 x that monthly amount, for a total of $400 K. Just as an example.
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Permalink Reply by Katie Waterson on
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@shalegeo, here's the info. 36 - 15N - 16W. Caddo Parish.
Anything you can dig up or know about Chesapeake adding anything/subtracting anything from this area would be a huge help.
But am I thinking about this the right way? The only way we (and/or the company that buys our mineral rights) stands to make any additional money is if new wells are added to OUR property -- that we own. It doesn't matter if it's added to anyone else's property in the 640 acre unit because my royalty checks don't have anything to do with well producing on other people's properties. Just like I assume there are landowners in the unit who don't have a well who are not getting royalty checks. Right?
So "undeveloped potential' is the potential for my property only in terms of this potential sale/investment?
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Permalink Reply by Katie Waterson on
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Hi Jay; mkatiewallace@hotmail.com
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Permalink Reply by kittycatmama on
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Katie, is this property in south Caddo? Indigo Minerals is also drilling multiple Cotton Valley wells in some areas of southwest Caddo, so that could be another reason you are getting the offers
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Permalink Reply by Aubrey C. Sanders, Jr. on
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Listen to Jay!!!!!!!! Get out your microscope and read fine print in offer. I have been rejecting such notices for at least 20 years. I finally got off Cobras' list. Or, simply place it in garbage can.
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Permalink Reply by Hopeful About Natural Gas on
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Katie, I am not an expert, just someone like you. HOWEVER, the folks on this board are amazingly knowledgeable and helpful.
For example, Shale Geo's word is usually good for whatever he says. If he says to recycle it that to me is a strong vote to toss it. However, there are others here who may have different views. Giving folks like you info is It's what our board does best.
I am sure the pros here also want to hear about any real lease/buy offers. If I could get 300 times my monthly royalties I might consider selling if I were in your position. But, to this uneducated good old boy it sounds a little too good to be true.
but, I will be "hopeful" for you and your good fortune! You have come to the right place to learn a lot of info very quickly to make a good decision.
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Permalink Reply by Henry on
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IMHO.... The Haynesville gas market is likely at its nadir right now. So one should buy when there is the proverbial "blood in the streets," not sell. It is not a seller's market. I cannot imagine prices are good.
Having said that, I have no idea of your financial position or age, so take my comments with that in mind.
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Permalink Reply by Katie Waterson on
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Henry, what is NADR?
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