Replies to This Discussion

Permalink Reply by Henry on March 21, 2011 at 23:12

ALongview,

My understanding was that these prices went to people who were already under lease, and their lease was for a 25% royalty.  I believe (but I won't swear to it) that this was for royalties, not minerals.  They were also in proven areas of the Haynesville Shale.

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Permalink Reply by P.G. on March 21, 2011 at 3:57

Would the sale of "royalties" be treated differently legally than sale of mineral rights..

Mineral rights in Louisiana are servitudes allowing one to seek minerals and will extinguish if not used after a period of time but will a sale of royalties be forever? Agreeing to split a share of something doesn't sound like a servitude.. Could an offer for royalties be a way around Louisiana's prescription laws?

The only way to figure if any amount is enough or fair to you would be to calculate what kind of money that property was capable of producing and then feeling comfortable with that offer..

 

A real rub would be selling then finding out the same outfit gave your neighbor way more for theirs!

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Permalink Reply by Skip Peel - Mineral Consultant on March 21, 2011 at 7:34

A royalty interest, for an investor, is a passive investment in that there are no "executive rights".  If a well is drilled and production is established in paying quantities, then the royalty as defined in the lease is paid to all who share in the ownership.  Investors will buy royalty interest when they are confident in the prospective nature of the mineral tract and fully expect that a well will be drilled within the term of the lease.  In areas of the HA/BO Play not sufficiently "proved" by the results of completed wells, an investor may not care to purchase or will heavily discount the value of royalties under an existing lease.  Especially if they think that the lease may lapse without development.  In that case the purchaser of a royalty interest is bound to whatever the owner of the mineral rights cares to do in regard to seeking and negotiating a subsequent lease.  Investors prefer owning mineral rights, even with the 10 year prescription provision, as it gives them the right to execute their own lease for their portion of the mineral tract.  If you reviewed the number of leases that I have in this play, you would completely understand why that would be so. 

 

A mineral owner may convey all or a portion of their interest whether through a sale of royalty or mineral rights.  However for an investor to receive "executive rights" they must purchase at least a one half interest in the mineral rights and the seller must grant the "executive rights" in their mineral deed.  Obviously the structure of a sale will be valued differently by an experienced buyer based on these different means of conveying an interest in a mineral estate.

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Permalink Reply by Renee Rains on March 21, 2011 at 4:31

Thanks!  I think these answers finally give me a clue of where to go next.

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Permalink Reply by Renee Rains on March 21, 2011 at 7:19

Question:  What is edgy and IMHO?

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Permalink Reply by Spring Branch,mineral owner on March 21, 2011 at 7:54

In My Humble Opinion.....IMHO

Edgy-- appearing to be possibly stretching the outer limits of the play, whether to the north, south,   east or west.  The statement that 9/10 and 10/10 are edgy is just my opinion.  Others might disagree.  The only way to know for sure is to drill wells.

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Permalink Reply by Two Dogs, Pirate on March 21, 2011 at 14:37

Edgy is out on the fringe of the play, not enough information to make a call. You may be selling a piece of the play that is the most productive. IMHO, some of the folks that are answering your posts are mineral/royalty buyers. Wolves attack the hen house. Natural Gas is fixing to go up in price, IMHO.

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Permalink Reply by ken hatcher on March 21, 2011 at 14:50

Ahhh, you always seem to come through at the most opportune time.

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Permalink Reply by BirdDawg, plain ole' idiot on March 21, 2011 at 15:31

Come on guys, everyones situation is not the same. None of us on here can tell someone what they need to do with their mineral interest. A lot has to do with ones personal situation. All we need to do is offer what may can be the case in different situations. There are no cut and dried rules. We do not know if someone needs money for a specific purpose. I agree, don't sell it all unless you have to. But I can not say "don't sell anything". You may be shooting someone in the foot.

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Permalink Reply by Spring Branch,mineral owner on March 22, 2011 at 7:29

TD,P as I'm sure you are aware, there is no sollicitation either to buy or sell allowed on this website.  It might shock you to discover that there are those who actually follow the rules.  I sure hope you are right about the price of Natural Gas.  It would benefit me and I would expect that it might actually benefit you.

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