Replies to This Discussion

Permalink Reply by reallyoldguy on August 29, 2010 at 15:01

So these are producing minerals that you're making an offer on? Personally, I wouldn't even consider selling producing minerals @ 3X annual royalty income. It would have to be SIGNIFICANTLY higher than that.

Permalink Reply by Neeky on August 29, 2010 at 15:12

correct. producing minerals. And I agree, I would not sell either. But this party wants to sell. I know they got a very poor offer from a company for like 1.5x annual royalty income.

Permalink Reply by reallyoldguy on August 29, 2010 at 15:21

The company that I recently did business with, and highly respect, "typically offers between 48 and 72 times the monthly income generated by your oil and gas properties, dependent upon certain evaluation parameters."

Permalink Reply by Owenson on August 29, 2010 at 15:46

It seems to me that any offer based on current production (no matter what multiplier) is not the way to approach the matter. It is not how much it is producing now that matters for either party. It is the potential value and who will own it.

Permalink Reply by ledlights on August 29, 2010 at 19:41

I agree, but few mineral buyers seem to be on the same page. Over 90% of the offers I receive contain absolutely zero credit for potential value. When their letters describe their generous multiple calculation of the tiny royalties I currently receive from property that is considered to be in the HS core (and possibly Bossier too but not drilled to the shale zones yet) I get kind of sick thinking about anyone they may take in with such BS.
Neeky, if you truly want to be fair then it seems to me that you should do the same kind of due diligence that typically is recommended to mineral owners on this board who consider selling their mineral rights. Find out what if any future mineral potential their property has. And you might consider providing the information you gather to the sellers. One of the fairest things that I can think of would be for you to consider an arrangement that buys some portion but not all of their rights if you think there is significant potential in the future for great profit from the property in question.

Permalink Reply by adubu on August 30, 2010 at 0:07

TD,GD,Ledlight,rog,neely----if you want real numbers on mineral value/per acre check thread last week under mineral value I posted two comments about a unit I have royalty in the Minden CV field over in East Texas. This will give you ideal what future value can be. It is very difficult to place true market value on minerals without production or value on minerals with only 1 or 2 wells. Placing a value without production or only 1-2 wells is pure speculation on buyer and seller, even the EUR on lots of the shale wells changes from time to time it will take 5-10 years to truly know what these wells will produce., then to estimate NG prices in future If buyer has inside information about the area thru 3-D seismic or tight lip well in area then buyer is at advantage and can low ball offer yet make it look good. Seller beware!!! I am not a buyer or seller of minerals

Permalink Reply by adubu on August 30, 2010 at 0:33

Addendum to above----- If I had sold these minerals based on 3 times income 1sr year after just one well had been drilled I would have received $1600/ acre only--- compare after 9 years and now 22 wells drilled I have received to date >$19,000/acre income and still producing ~$3,000/acre/year income with 3 formations bossier/haynesville shale, and the CV Lime yet to be drilled and tested. Yes--I understand production will decline but many wells to be drilled in future. As Mastercard commerial says "Priceless" I know ROG is very honest in her opinion about the company that purchased her minerals and for those people that need to sell their minerals this is information for them to look into. I simple give info about reason not to sell and how difficult it is to place true value on your minerals-- it's location, location,location---plus many other varibles. This is just IMO--I'm as Honest as they come--- learning info for members

Permalink Reply by adubu on August 30, 2010 at 0:57

Addendum #2 to above----the $3.000 + per acre per year continue income is even with NG prices at $3.75 avg for this year. If NG prices improve the income on this unit will also increase per year and more drilling will occur. I get offers monthly in mail for these royalties. The highest offer that was a little tempting was for $17,000/acre in 2008 when NG prices peaked at $14. That was hard to pass up but still happy I passed.

Permalink Reply by ledlights on August 30, 2010 at 6:03

Adubu,
Your's is a very good example of potential that is in the process of being realized. One important thing to remember about ROG's experience with selling minerals is that ROG has still held onto a crown jewel property with a ton of potential. ROG had a situation where much needed funds could be raised via selling minerals (a transaction that reportedly went quite well) while very, very good looking minerals could still be held for its future potential.

Permalink Reply by Spring Branch,mineral owner on August 29, 2010 at 17:10

TD,P .....someone should jerk these posts of yours immediately. Your purpose is clearly to intimidate the original poster and Keith should not stand for it one second!!! I happen to know for a fact that whether you agree with "him" or not, reallyoldguy is perfectly legit. The fact that you have been on this site for a long time makes zero difference. So have I .....so what!

Permalink Reply by Two Dogs, Pirate on August 29, 2010 at 17:11

OKSpring they are gone Thanks.

Permalink Reply by Spring Branch,mineral owner on August 29, 2010 at 17:15

Thanks, TD,P

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