Replies to This Discussion

Permalink Reply by Renee Rains on March 21, 2011 at 3:10

Ok maybe I didn't make myself clear.  I ask about a fair price to sell royalty's only not mineral rights at all.  I was offered $1,500.0 per acre for royalty's only.  I understand no one wants to pay top dollar to me but I haven't seen any prices per acre on here for royalty's.  I have seen minerals go around here for $4,200.00 per acre.  I just wanted to know if $1,500.00 was even close to a fair amount.

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Permalink Reply by Henry on March 21, 2011 at 3:43

Renee,

Here's what I know.  Take it with a grain of salt.  I was told, last fall, that 25% royalties, in good parts of the Haynesville Shale, were selling for anywhere between $5,000 and $7,500 per acre.  This came from an attorney who had helped in some sales.  For purposes of doing the math, let's say $6,000/acre.

 

Your royalties are at 3/16, so you would immediately decrease that to $4500/acre.  Your area has not been drilled yet, so there would be some discount because of that risk.  Once you are actually drilled, and have a producing well on your land, I would think the value of your royalty would be higher than it is now.   That's just me.

 

Hope this helps.

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Permalink Reply by smith1 on March 21, 2011 at 3:48

My dad wants to sell his royalties in Section 32, T10N, R10W, Natchitoches Parish, He signed lease with XTO about 2 years ago. So, would it also be fair to ask $4500/acre? His is 25%. Or should he wait until drilling has (if) begun? He is elderly and in bad health and wants to sell now. Thank you.

 

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Permalink Reply by Skip Peel - Mineral Consultant on March 21, 2011 at 4:26

The XTO Steadman 28 well in Section 28 - 10N - 10W will define the prospective potential of this general area of the Play.  There are no other drilling wells as close to Section 32.  And none to the immediate east or south.  This is the edge of the Play.  Situations such as this pose a challenge.  When the well is completed and the outcome is no longer in doubt, a good well will increase value and a poor well will decrease or eliminate any value.  In this specific case however there is no great rush to make a decision owing to the fact that the well was reported on February 28 as "Stuck Pipe; Temp P&A".  That means Temporarily Plugged and Abandoned.  There is no rig shown for this location on the current rig reports.

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Permalink Reply by smith1 on March 21, 2011 at 4:35

Thanks, so I guess it's just a 50/50 chance, but seeing he wants to sell now, it there any discussion that would tell us how to proceed?

 

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Permalink Reply by Skip Peel - Mineral Consultant on March 21, 2011 at 4:53

You might wish to start by contacting some of the advertisers here on GHS.  Some appear in the right hand column of the Main Page.  If you have any trouble you might contact Keith and ask him to help you find all the advertisers that purchase royalties.  Depending on the remaining term of the lease and owing to the significant slow down in step out drilling, you may find that buyers are not interested in royalty, only mineral rights.  Don't make a decision to sell until you have received at least three offers.  Let those providing offers know that you will seek offers from multiple sources.

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Permalink Reply by smith1 on March 21, 2011 at 5:38

I will do just that, again, appreciate all the help

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Permalink Reply by The_Baron on March 21, 2011 at 7:11

It might be worth considering only selling part of your royalty.

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Permalink Reply by smith1 on March 21, 2011 at 7:15

Hmmm, i guess i did not realize you could do that, like just a percentage? that way we still receive some (if they do drill)?

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Permalink Reply by Spring Branch,mineral owner on March 21, 2011 at 6:54

Henry, the operative words are "in good parts of the play".  In my opinion, 9/10 and 10/10 are edgy and the areas don't have much history to support their being called "good parts of the play", at least for the Haynesville.  Their value will largely depend on the Bossier shale, IMHO.  Keep in mind that Haynesville mineral values (at current gas price) are largely dependent upon the timing of alternate unit wells.  Mediocre Unit wells result in greatly delayed alternate unit wells (if ever).  For the mineral buyer who is not a thief (yes they actually do exist), the alternate unit wells are where the profits are, not the Unit well itself.

Just some random thoughts.

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Permalink Reply by Henry on March 21, 2011 at 13:38

SB,

You said it better than I would.  I agree totally.

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Permalink Reply by ALongview on March 21, 2011 at 14:12

Henry, Was that $5000 to $7500 per royalty acre or per net mineral acre?

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