Replies to This Discussion

Permalink Reply by RONNY on July 8, 2018 at 9:28

For $19000 an acre I will sell all my Juraissac in 15n 14w sections 19 and 21.

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Permalink Reply by kittycatmama on July 9, 2018 at 4:38

I spelled it wrong in my discussion header and went back and corrected.  Jay as a geologist do you hear about or view any oil at any levels (even the deepest areas below the Haynesville) that so many people reference when talking about the Haynesville. Is ALL of that myth? is it just because people WANT TO BELIEVE there is more to the Haynesville than what they know?  These oil rumors have been going on since Haynesville was announced. Sometimes myth has some truth to it

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Permalink Reply by RONNY on July 9, 2018 at 9:43

I am ROTFL, Jay.  That's what i get for copy and pasting.  I'll take $19,000 an acre for my "Jurassic", Haynesville, Cotton Valley, Tuscaloosa and everything from surface to China, both named and un-named. Jus sayin'

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Permalink Reply by kittycatmama on July 10, 2018 at 3:32

Jay I know the gentleman who got the offer. He is a very serious person and not one to brag. He is looking for the offer as he still has it and the business card of the individual who made the offer. it was a Texas person. Also I thought the offer was recent but it was in 2017. He said the offer was for $19000 per ACRE. I should be back in town this weekend and I will look through his offers as he said he has several but that one was the tops. This may have been early 2017. I don't know until I see the offer but I am curious too. I took him seriously as this is not someone who brags about stuff. Now he may have misunderstood and was being offered $19000 for 2 ac. That I don't know as I haven't seen it but he insists it was PER AC.

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Permalink Reply by RONNY on July 10, 2018 at 0:56

Good point Jay. It is probably per royalty acre which would put it in the range of a recent offer I had of $4000 per acre.

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Permalink Reply by Skip Peel - Mineral Consultant on July 10, 2018 at 1:46

I think you meant $40,000 per acre, RONNY.  For someone with a quarter royalty, 2 Royalty Acres per Net Mineral Acre, the offer would be $38,000 per Net Mineral Acre.  If the offer was actually for $19,000 per Net Mineral Acre, then it would equal $9,500 per Royalty Acre.

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Permalink Reply by kittycatmama on July 10, 2018 at 3:34

Ronny $4000 an ac is the lowest I have seen. We have stuff down in sec. 21 of t14 r15 and we are seeing a lot higher offers. I have heard that a lot of mineral buyers are not bidding on anything with more than 2 wells. They want the reserves still in place.

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Permalink Reply by Skip Peel - Mineral Consultant on July 10, 2018 at 3:45

Mineral buyers like to use Net Mineral Acre when they make offers to mineral owners but they deal in Royalty Acres.  A RA calculation takes into account the NMAs and the lease royalty fraction.  You can not calculate value without both.

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Permalink Reply by kittycatmama on July 11, 2018 at 17:29

Let me present a scenario to you all. 80yr. old couple with one child who is 57. say they own 100 acres in a sweet spot in the Haynesville and have 1 well paying tiny amount. Say they are all struggling and along comes the tooth fairy who offers them over a million dollars. Would you advise to WAIT until they get their multiple wells or live it up. Another scenario, an 81 yr. old woman who is still working because she doesn't make enough social security to get by and never made enough money to save anything and she has 10 acres and is offered $90,000. Does she save it for her kids who don't help her and let her work everyday or does she take that $90,000 and live it up and quit working. These are real people whose lives have been changed. Neither got bonuses because they were held by old Cotton Valley production so finally they get to enjoy their lives. This is the human side of what selling minerals can do for some people. Not everyone needs to sell or some people may just want to sell a few acres and leave the rest to the kids to squander. Just my two cents

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Permalink Reply by Skip Peel - Mineral Consultant on July 12, 2018 at 2:13

There are many reasons for considering the sale of a mineral right.  Unfortunately many land owners have a similar approach to how they leased.  They have little knowledge of the mineral value by location and no frame of reference for what constitutes a current fair market value.  It pays to get professional assistance to make an informed decision. 

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Permalink Reply by Andrew on July 13, 2018 at 6:30

Agree with Skip - getting professional advice from a financial planner and oil and gas lawyer is critical. 

If you aren't selling, you are buying. Can you afford to pass on the offer? This must be considered. 

The person receiving the offer should first contemplate if it makes good business sense to them, then if it does they should contact a lawyer to review the proposed paperwork.

Many lawyers do a major disservice to their clients by talking them out of selling - its easy advice to give other people but they aren't walking in their shoes and lawyers aren't generally qualified to render financial planning advice. 

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Permalink Reply by Dion Warr, CPL on July 12, 2018 at 15:20

Skip:

Not to toot one's own horn here, but there's a wonderful blog post that was posted ca. 2009 that seems relevant to your comment...

Link

Hopefully it sheds a different angle of light on the discussion...

(Oh to be alive when GHS was new...)

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