Replies to This Discussion

Permalink Reply by Speedracer on July 14, 2018 at 7:01

Hi Skip,

in 2014 I sold a property for $1.1 million covering 600 acres in Harris County Texas near lake Houston consisted of 3 wells from one drill pad.  Data sent to Energynet included a source deed, division order, most recent copies of check stubs -3-4 months and as much pertinent file information as possible.

The data was sent to their Amarillo office and they enter the data into a lot that the buyer is able to view.  Energynet assembles the data and includes charts and graphs that reflect income and production.

While I was working for Bank Trust departments we sold small and medium sized properties.  Buyers can use a proxy bid that is automatic and bids to a certain range and stops once it hits that top limit.  The final minute of the sale can be amazingly exciting as the competition pops the price in the final seconds of the sale.

i realize using Energynet was my special “niche” of my contribution to my employers.  

Let me know now if I can further answer questions.  Do you have a good source of ideas for folks on the board who might be interested in selling.  Thank you

Permalink Reply by Skip Peel - Mineral Consultant on July 15, 2018 at 10:49

Thanks, Speedracer.  That was the distinction that I thought worth making.  Energynet doesn't provide the research, data links and special circumstances that add value.  I'm sure it is a good alternative for those who are capable of providing that level of detail. 

The best offers come from knowing the companies that have current interest in a particular area and their target deal size and structure.  That's a moving target that for most requires some professional assistance.

Permalink Reply by Bill R on July 19, 2018 at 5:03

The Buyer has called again and stated they are only interested in our San Augustine Minerals at that amount... and that was for Purchase of both Mineral and Land holdings. I will live up to my Great-Great Grandfathers wishes and never sell outside of the Family.

Permalink Reply by Chloe on July 19, 2018 at 9:55

I have always been told “Never, Ever sell your Minerals!”

Permalink Reply by Skip Peel - Mineral Consultant on July 19, 2018 at 10:29

By who?  A geologist?  A reservoir engineer?  Unless you are getting advise on minerals from someone who is capable of making a professional judgement, you are listening to someone who is not qualified to provide an opinion. 

Minerals will not have value for another 100 years.  They have a limited life as an asset.  Every case is unique but there are certain instances when even I can tell someone that is they decide not to sell, it is unlikely that they will get another chance in the future.  Evolving technology can not revive the prospects of all mineral assets.  Some are basically done now.  Others may be prospective now but not in the future.  There will many instances of "stranded reserves".

Permalink Reply by Chloe on July 19, 2018 at 12:08

I do not recall all of  the "titles" of all of the various people who have told me this over the years. One instance I had a friend who her dad and his siblings were offered money for land and minerals. All of the siblings sold early except my friends dad. My friend said once it was all said and done, the land & minerals the siblings sold made the buyer mega money.. but.. the minerals the dad held onto made his family mega money. So, George P. Mitchell got rich off the siblings that sold out, but the dad made his family fairly wealthy and sent all the kids to college etc... He held on tight to his minerals ! It was near the Barnett shale, but not even considered in the shale itself.... Later the family made money on the wells being used as salt water wells of some sort.

Permalink Reply by Two Dogs, Pirate on July 19, 2018 at 13:47

I am with you Chloe. I sold a 1970 Mach I 428 Cobra Jet Mustang and have been on a ass kicking machine ever since. What something is worth one day may be worth 100 times as much a little while later on. You still have it until you sell it. Once it is gone then it is gone. Don't get on the same ass kicking machine as me.

Permalink Reply by Chloe on July 20, 2018 at 19:55

I agree Two Dogs ! ..In my mind...  It is like going to the casino, or choosing to manage your own portfolio in the stock market.  Same as here...  It is about risk and rewards, what your comfortable with, if your desperate or not, and so many factors!   I currently have a 2005 Chevy Corvette, I wanted to sell it.  All of the car dealers low ball me... They bank on you being desperate for money...  (maybe , maybe not)  Well..  It's it like this..  I know this car may not be worth a heck of alot... but I know if I hang onto it....  The price will eventually go up!!  Once it is many, many years old.... lol..      Atleast it will be in the family if I hang onto it... even if I am not around!  :-)..    It is still a investment and you should try to mix it up!     So yeah, so many variables..  I appreciate this thread and have fun reading it!.. 

Permalink Reply by Skip Peel - Mineral Consultant on July 20, 2018 at 3:44

I have discussed this subject with a number of heirs to minerals and land.  I have a little insight on the subject for several reasons.  First, my father was born in 1902 and my mother in 1913.  They lived through the Great Depression as adults and have the lasting influence of that experience.  Many of the family members who preached "never sell the land" were motivated by their experiences in the Depression.  Many families survived because they had a place to live and land to raise crops and animals.  If you expect another Depression and you have the skills to live off the land, then it is a reasonable decision to hold on to the land.  If not, holding it depends on perceptions of future worth.  Unless it grows trees or can be leased for agriculture use, it has little long term value as an asset.

The age of hydrocarbons is coming to an end.  Renewable and alternate energy sources will supplant hydrocarbons over the course of the next 20 to 30 years.  That is currently considered a very conservative estimate which could change significantly depending on advances in carbon capture and battery technology.  Oil has the shortest projected economic life owing to the fact that the majority of demand is as a vehicle fuel.  The ascendance of Electric Vehicles (EV) will sharply curtail the price of oil and make only those reserves with the cheapest of costs economic.  There will be a lot of "stranded reserves" that will not be economic to produce.  Natural gas will fare better and have a longer economic life as the primary fuel for generating electricity.  It will also have some use as LNG and as a vehicle fuel for certain fleets such as garbage collection and city buses.

I suggest to all my clients with relatively significant mineral holdings to have a plan to monetize the assets over time.  The best times to sell is when there are events that increase the value of minerals.  These tend to come and go over time as commodity prices spike, new operating companies take over or expand development areas or technology makes previously non-economic reserves profitable to access.  Since nothing is for sure in the future, I advise to sell mineral rights by fractional interests; a quarter, a half, etc.  The strategy should lead to total divestiture over a period of ten to twenty years.  By this approach, someone managing minerals avoids the possibility of "stranded reserves" and monetizes all or the bulk of the mineral interest during periods of enhanced value.

Permalink Reply by Chloe on July 20, 2018 at 20:01

Thanks for your reply Skip!      It is insightful for sure...   I think landmen as your title reads make a living at buying and selling minerals  ( I could be wrong)...... 

So I value your opinion and I see some of your points!   We will never see Eye to Eye!  The conversation is enlightening from another perspective though!

have a great weekend !  :-)

Permalink Reply by Skip Peel - Mineral Consultant on July 21, 2018 at 1:13

Independent Landmen, not connected to the industry, advise clients that own minerals.  Usually significant acreage interests.  Individuals, families, LLCs, etc.  Considering the potential value of the asset, it makes sense to have professional assistance.  Those large land/mineral owners also have experienced O&G law firms that look out for their interests and, in some cases, accountants that are knowledgeable concerning mineral revenue.  Landmen rarely buy and sell minerals.  Independent landmen can and do advise and assist in  the sale of mineral interests.

Permalink Reply by Bill R on July 19, 2018 at 18:12

Our Family holding are all held in moratorium for perpetuum, meaning the holding may never be sold outside of the family. We can however lease the Minerals, Water and Land... the Timber can be sold, but all else is our Families forever.

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