Currently offers to buy minerals are the highest in the history of the Haynesville Shale.  This is owing to two facts:  natural gas is once again the focus of mineral investors because of the longer economic life perception compared to oil; and the recent and sustained price of natural gas which is expected to continue well into 2022.

I have a long history of encouraging GHS members to think of their mineral rights as an asset.  Those clients that pay me for my depth of knowledge and opinion get the same advice that I provide here.  I recommend selling all or a portion of mineral rights when values spike.  For those with a large acreage ownership, that might be 2 to 4 sales over the next 10 to 15 years.  For those with small or modest acreage, my professional opinion is no better than your best guess as to what values may be in the future.  The is the greatest value spike in the history of the Haynesville Shale play to date.  Longtime members will remember the 2008 run up in lease bonus offers and how they changed drastically with no advance warning in the fall of that year.  Just like trying to time the top of the stock market, trying the same for mineral values is a crap shoot.  Win some, lose some.

I have two observations that I would like to share with members.  The first is that there are a number of buyers who are new to the Haynesville Shale market and learning their way.  As I have mentioned in the past, any offer that starts off with a request that you average your last three royalty payments and multiply by 60 months (or any number of months) should be deposited in the trash can with no effort to respond.  This is an old tried and true approach targeted to mineral owners who know little about the value of what they own.  The true value of your minerals is not based on past wells, production or current royalty payments.  It is based on how many wells will be drilled in the future.  The remaining recoverable reserves.  My advice is to avoid dealing with any company making offers based on current royalty payments.  They are bottom feeders looking for suckers.  I don’t wish for any GHS members to be a sucker.  That being said, selling minerals is a personal decision and anyone who sells for a price that meets their approval should not be criticized. 

Owing to the greatly increased competition for Haynesville/Bossier minerals, some buyers are deploying new methods to lock in sellers who make a quick commitment to a sale.  I am seeing some buyers being quick to send digital (email) purchase and sale agreements to mineral owners that express interest in the purchase amount offered.  I’m old school and not up on all the means to do this but the one I have experienced lately is docusign.net.  This is a buyer effort to lock a mineral owner into a quick decision to sell and does not necessarily include the traditional mineral and title due diligence that is associated with purchase and sale agreements.  It pretends to lock the seller in while the buyer has time to do some research upon which to base the sale including lowering the price offered if the mineral royalty is less than what the offer was based on or any other extenuating circumstance that in their opinion changes the value.  The buyer using this approach wants mineral owners to think that they are committed while the buyer has the option to change the offer that the mineral owner agreed to in the digital purchase and sale agreement.  Please do not jump at offers made in this way and if you have already digitally signed such a purchase and sale agreement and the terms of the sale have changed, consult an experienced O&G attorney or firm.