Mineral Value
3 months ago, I sold a portion of my mineral interest. Prior to the sale, there were no producing wells within a 2-3 mile proximity of my minerals. This made it difficult to determine a mineral value. However, since that sale, there have been 3 very large wells(25-31 Mmcfd) reported around me. Im, again, considering selling a small portion of my mineral interest. Yes, Im aware of the long term value of minerals, but my question is this: Is there anything that could happen, at this point, to either increase or decrease the value of my minerals? Obviously, the mineral value went up, significantly, with the IP reports of the new wells around me. Would the immediate value, of the minerals, continue to rise with the reports of more wells in the 25-31Mmcfd range? Would their value decrease with new reports of lower producing wells? Or will their value remain, somewhat, constant just based on these new large producing wells around me? Thanks for your input!
Views: 415
Replies to This Discussion
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Permalink Reply by Les Bamburg on -
ROG, each person's long term outlook for natural gas prices would have an impact as it changes.
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Permalink Reply by Jack Blake on
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Jack Blake says your minerals are worth alot more than they are offering and they will pay you alot more than they are offering................................
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Permalink Reply by reallyoldguy on
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Yes Jack, I agree. Anyone is always willing to pay more than they are offering ! However, I dont have a firm offer on the table. Im just trying to figure out if the value of the minerals will go up, in time, if any more large wells are reported in and around my survey. Or is the value now, more or less, set based on the three wells @ 25-31Mmcfd IP's.
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Permalink Reply by adubu on
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rog--- who know what the value could be in future. Prior to the 1960s NG was flared and burned off on oil wells-no value. Then it found commerical usage and sold at 10-25 cents mcf. in mid 1970S it hit $1 and people felt like they won the lottery and then in early 2003 at $5 they said it would never stay at $5 -- they where correct it hit $14.50 in 2008. Now We back to $4 gas and its Doom. If we do go to NG as transportation energy and replace 50% crude the price for NG in coming years is anyone guess. If you have multiple formation in your location of production over time many-many wells can be drilled. Value then could be who know for sure IMO good located minerals north of $100K per acre. If you have no oil/gas they have no value. If you have sweet kids with sweet grandkids put minerals in family trust LLC and distribute the income as you desire.
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Permalink Reply by Morris Snelson on
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What price per mineral acre did you get? What are the offers now?
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Permalink Reply by adubu on
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rog--- do not read me wrong that no person should sell their minerals-- for every family has their own financial situation. The value of minerals will fluctuate at varible time due to mulitple factors not the less are what going on in the area as far as drilling and production, NG prices, general economy, etc. No one can predict the future. See my earlier post on this thread. I know of minerals in your general area that changed hands for $200 acre just 5-6 years ago and the sellers are very sad today. If you have a large tract of minerals like you selling off small # to hedge your investments may be OK thing to do for "one in hand is better than two in the bush" The best business deal is when both seller and honest buyer are happy with deal so long as seller is informed of complete situation of activity and other information the buyer may know that is not public at time that could influence the value, you can compare it to inside trading in the stock market. If someone trades on inside infomation on stock market the SEC can file charges and you can get hit with big$ fine plus worse jail time in federal pen. This is not the case in oil & gas deals notice how tight lip things are on some wells and how people who knew about the Haynesville shale leased land for 150-200 acre with 3/16 royalty before news broke. These people with knowledge made big bucks early in the play. So Can not tell you what the true value of minerals are today. I can tell you the price today will be different than the price 20-25 years from now. Higher? Lower? I would bet on higher IMO. Nice to hear the group that purchased some of minerals where nice to work with and appears to be honest and you can recommend them.
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Permalink Reply by reallyoldguy on
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Adubu: Thanks you so much for your replies. I always appreciate the time you take to inform fellow "Shalers". Your opinion is greatly respected. You bring up a good point about how The Play is ever changing. I leased 2 1/2 years ago for $200/acre @ 1/5 royalty. My minerals were leased to drill James Lime, as no one had heard of the Haynesville Shale. Then, as recently as 6 months ago, many people doubted that the HS went as far South as my minerals are located. So, I guess it is fair to say that no one knows what the next two years hold for The Play. I think I just have this sinking feeling while watching nat gas prices fall well into the $3.oo range. Ive only started following my minerals, and nat gas prices, in the past 6 months. Best I just sit back and ride this roller coaster, like everyone else has been doing over the last several years. Thanks again...
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Permalink Reply by DJG on
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Yo Old Dude,
That NG price is going to fluctuate like a roller coaster. With all of the drilling that needs to happen in the next year or two to get all of the play HBP putting more gas into production than is currently marketable the price seems likely to be trapped into that $3-$5 range for the near term over the next year or two.
That said, I haven't seen any sources out there predicting that the long term price of NG over the next 5 years, 10 years and beyond is likely to stay at those low levels.
WIth that in mind, I agree that you'll probably be best to wait it out a bit longer. You are in a VERY good neighborhood where your minerals are located and I imagine that you'll get drilled sometime not to far down the line.
I know it can be hard to wait it out when there is cash money being offered right now, but don't fret as there should be plenty more bingo money in the pipeline once you get that first well drilled and we get a few more years past us during this glut period.
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Permalink Reply by Henry on
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ROG,
One thought... There are more ways to make money from the Haynesville Shale than just by leasing your gas and selling your royalties. Look out there for pipelines that may be going through. You can get a ton of money to hold you for a year or two from a pipeline if you have a sizable tract. If you have a pond, go looking to sell water. You could lease a few acres for a staging area. You might get enough money to last a while, and then you could sell your royalties later if gas prices go up.
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Permalink Reply by reallyoldguy on
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Henry: Thanks for the reply. Im really not so concerned with making money, as I am about "hedging my bet".
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Permalink Reply by The_Baron on
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You may want to consider selling royalty, this will leave you with control over future leaseing while still allowing you to "hedge your bet"
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Permalink Reply by reallyoldguy on
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Thanks Baron. That was something that Cabot told me to consider rather than selling rights. I believe when you sell royalty that the royalty sale expires with the lease. Is that correct?
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