Replies to This Discussion

Permalink Reply by Spring Branch,mineral owner on December 27, 2008 at 7:50

HBP, that is great advice by my way of thinking. There are royalty and minerals bought and sold every day, not just in he Haynesville, but all over this country in oil and gas producing areas. Not everyone finds him/herself in the same life situation and what would be proper in one situation would not be in another. It simply has to be approached as a business deal in a very business like manner. If one is not sure what to do, the best thing to do is probably nothing.

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Permalink Reply by The_Baron on December 27, 2008 at 7:55

I disagree Snake, if you anre not sure what to do...reasearch it and make an educated choice.

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Permalink Reply by Bruce on December 27, 2008 at 7:39

Hi Parker, I have been thinking about MPH Production it has been on my mind and now I remember where I have heard of them. I was at the courthouse in Minden and saw where MPH had leased land around Doyline and petrohawk was also listed on the lease. They seem to be to Petrohawk what Twin Cities' is to Chesapeake. Hope this helps.

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Permalink Reply by Bobi Carr ("parker") on December 27, 2008 at 7:44

Bruce,

Thanks. I ran them in Bossier and only found one conveyance where they purchase 50% of minerals on a few small tracts.

I get these offers frequently for producing minerals and have gotten a few from the usual suspects for other undeveloped property. I hadn't heard of MPH and wondered if they were connected to Encana.

Thanks for the information.

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Permalink Reply by Bobi Carr ("parker") on December 27, 2008 at 8:15

Spring Branch,

I agree that non-producing minerals will create a servitude for 10 years only, but at the end of the existing lease who would get to lease the property?

I believe if it is a sale of royalty only that the naked owner would get to lease the property. If it is a sale of mineral rights, the mineral purchaser would get to sign a lease and receive any bonus monies.

Do you agree?

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Permalink Reply by The_Baron on December 27, 2008 at 8:24

Minerals prescibe to the surface owner after 10 years. NO production is nessary, only drilling is nesessary. A Sale would be subject to any existing leases, but new leases would have to aquired from the mineral owners.

Now, in a royalty sale the mineral owner has all rights in respect to leasing, and is entitled to lease bonus moneies. The Royalty owner is entitiled to whatever share of royalties negotiated in the royalty deed.

A royalty sale in La will prescribe in 10 years as well, but prescription is interrupted only by production or a successful well test showing that it can produce.

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Permalink Reply by Bobi Carr ("parker") on December 27, 2008 at 8:29

That was my understanding.

It just seems weird that if you sell 100% of your royalty ownership that you could theoretically withhold re-leasing until minerals prescribed back to you. Surely there is something in the royalty transfer that prevents this from happening.

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Permalink Reply by The_Baron on December 27, 2008 at 8:37

You could withhold releasing, but you could always be force pooled.

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Permalink Reply by The_Baron on December 27, 2008 at 8:40

I personally would be reluctant to buy a royalty where there is no current lease.

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Permalink Reply by The_Baron on December 27, 2008 at 9:39

There is no question that royalty buyers are buying on the hope of making money of the deal. If there was no chance for potential profit they wouldn't be buying. They also have to have the hope of bigger profits than other investments would have. Also in LA, where the minerals or rolaties could prescribe increases the risk of no return reducing potentila sales prices, therefore the prices in La should be much lower than in TX or AR, and also why i would be reluctant to buy a royalty on an unleased tract, I would feel better about a chance of production and thus interuption of prescription on a tract already leased.

The landowner must decide what is better for themselves, is a garunteed sum today (that could be invested no) is better than a chance for money over time. This money over time could be more or less than received today, inflation could wipe out any gains, or gas prices could collapse. Maybe Lex Luthor could develop fusion power making oil and gas obselete. Or the oppisite could happen, prices could rapidly inflate and the landowner is sitting on the biggest find in gas ever dreamed. The choice to sell now or wait for a hope of better returns is dependent on the landowners situation.

If I was 60 years old with a samll retirment, why not sell now and use the money to enjoy while I still could, or an 18 year old could sell now and payu for the education he couldn't otherwise afford.

Permalink Reply by Spring Branch,mineral owner on December 27, 2008 at 10:40

A hedge transaction that many choose would be to sell part of the minerals for an up front lump sum, and hold part of the minerals for a hoped for big hit over time.

Permalink Reply by Spring Branch,mineral owner on December 27, 2008 at 10:32

Put another way, drilling a dry hole will interrupt prescription on minerals, but only actual production interrupts prescription on royalty??

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