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Permalink Reply by Skip Peel - Mineral Consultant on July 20, 2022 at 7:20

If you have a good use for the money, now is as good a time to sell as any in the history of the Haynesville Shale.  You have 4 new wells just completed.  It will be some months before you see the first royalty income from those wells.  Buyers will be eager to buy as much of your mineral interest as you are willing to sell.  Be aware that there are 7 more wells that will likely be drilled in the future that include your section.  Your section has proven Bossier shale also.  My usual question to those considering a sale is:  how do you plan to use the money?  Got an immediate need?  Got a great investment opportunity?  Want to pay off debt?  Every situation is unique and mineral rights are like any other asset and are yours to do with as you please.  If you are reasonably financially secure and don't have a compelling use for the cash, you can just hold onto your rights and take the royalty revenue.  Keep in mind that you can sell some instead of all.  The industry tends to work on eighths.  So: you could sell a quarter, three eights, five eighths, etc.  The remaining well slots not drilled at this time will be at some point in the future.  That will be another opportunity to consider a sale.  Good luck.

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Permalink Reply by Jesse Joyner on July 22, 2022 at 4:16

ShaleGeo is a truth-teller in this regard. The "vultures" have to make a profit. In other words, they don't buy minerals to do a good deed or to help you out.

No. Not even close.

So let's say they can -- hypothetical -- make a 30% profit off their investment (which might be low or high) depending on the land's location, etc.

That's a 30% upside that you forked over to them.

30% you lost out on.

Think about it. They're in the business to make money. It's all about getting a low-risk/high-profit return on their investment. They are not charitable organizations. They know exactly what they're doing. They're making money. 

Now, over the years, I've known a few folks who've sold their minerals; and in general, they have regrets. One of my relatives did it before he died. And his heirs were not happy about it.

Conversely, those who keep their minerals tend to be quite happy that they did not sell them. They've had to pay less taxes and have garnered a steady income stream -- month after month -- from direct deposits via royalty mailbox-money income for years and years.

Finally, these days many GHS members don't waste their time trying to preach the truth to folks who are asking such questions as this. They have busy lives. 

 

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Permalink Reply by Skip Peel - Mineral Consultant on July 22, 2022 at 4:55

I've had a good bit of experience with mineral sales through the Haynesville Shale years and can provide a number of instances where buyers acquired minerals that turned out to not be prospective for economic shale and instances of sellers being quite grateful for the chance to sell and accomplishing important things for them and their families. 

In the early days of the land rush there was little hard data to inform the boundary of the shale fairway and the variations of properties that defined rock quality within the fairway.  Some industry veterans spent big bucks to acquire mineral rights that turned out to be worthless or were not prospective for Haynesville shale.  The folks that sold those mineral rights would certainly tell us today that they were glad they did.

I generally think it is not my business to tell other people what to do or not do with their assets.  I'll provide a couple of my experiences that I think most will agree were quite beneficial for the sellers. 

A husband and wife sold a one half interest in their ~50 acre property.  They used the proceeds to pay off the mortgage on their land and house and the wife went back to college to earn a higher degree.  As it turned out, their minerals were never drilled in the ten years of the mineral servitude.  It expired, they got their 50% interest back and then a later era of shale development brought them back into the play and they got a lease, wells and royalty income.  They would tell you that if that had never happened, they were quite satisfied with what they accomplished through their sale.

An elderly E TX man in his 80s had a terminal illness and was on dialysis.  His title to the mineral rights owned by his deceased wife were clouded by the fact that a succession had never been filed and therefore he received no benefit.  His only child, a daughter in her 60s, was in poor health and unable to work.  The man wanted to sell his wife's minerals to provide for his daughter after his passing.  I paid an E TX attorney to open a succession and clear the title and set him up with a buyer that was willing to pay what I considered the current fair market price.

I could go on with other examples but my point is two fold.  First it is the right of any mineral owner to make the decision to sell or not.  Since we do not know their personal situations, it is a stretch to preach to them one way or the other.  And secondly, there are instances where sale proceeds provide opportunities that royalty income does not.

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Permalink Reply by Jesse Joyner on July 22, 2022 at 5:54

When a GHS member asks a question, it's always nice to see a balanced response from both sides of the pros and cons. Us landowners have no dog in offering our advice. We're not making a profit either way. Our objectivity isn't income fueled.

Over the years, going back to before the sharpie insiders had ever let the cat out of the bag in regards to the HA reserve, I've personally had hundreds of offers from mineral buyers (of all shapes and sizes) to buy my minerals. Of course, there'll always be the exceptions to the rule. There will always be outliers on selling. But knowing what I know, if a person's land is in a productive location with proven reserves, I'd say probably over 80% of the GHS members who've been in royalty pay this last decade would say they are quite happy to have held onto their minerals. I know I am, to answer GB's question.

Most, I think, feel that GHS truth-telling is important. In other words, that's why Keith started this site all those many years ago. It's about sharing the truth.  

Now, since GB has been asking us this question, going all the way back to Feb., long before NG futures ever hit $8 (as of today) -- I would suggest that any delay in selling GB's minerals has truly been quite profitable to GB's mailbox money income stream, or will be in the future. 

Lastly, I liked OldDog2020's answer to GB's posting back in March --> 

Reply by OLDDOG2020 on March 2, 2022 at 14:57

This was a phone call from a MESA representative and I laughed at them.  The rep started telling me how much more I could make if I took their money and put it into a fund rather than minerals.  I told them they should do that and forget my number.  

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Permalink Reply by Skip Peel - Mineral Consultant on July 22, 2022 at 6:20

There is no right or wrong to the decision to sell minerals.  Dealing with reputable companies and getting competing offers are the basics but there is a need for a prospective seller to know the details of their mineral interest particularly the number of wells to fully develop the reserves and the public record data that informs the timing of those wells.

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Permalink Reply by Gayila B on July 26, 2022 at 3:04

Thank those of you that responded.   Good information on both sides of the decision to sale or not to sale some of our mineral rights.   I think at this time considering the new wells that just started producing and per Comstock will begin paying in September, I will just hold and wait to see how proceeds will increase.  

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Permalink Reply by OLDDOG2020 on July 27, 2022 at 4:32

A good general rule of thumb to remember about mineral buyers : Buying minerals is not their full time job but being a HUSTLER is.  My encounters with mineral buyers are that they are vultures (as stated above by another commenter) and rely on people who are either un-informed on the value of their holdings or people who are in a financial bind which may make them more susceptible to taking a buyout for one or two wells versus the real value which is 5 to 11 wells.  I know or have known several "mineral buyers" and I wouldn't let them buy a ham sandwich from me.  Ive had other mineral buyers call me and offer to make me rich but I was making more in 6 months than what they were offering.  I've had them ask if I would take 50 million for my minerals and when I ask if thats their offer they say no but would I take it? BY THE WAY that's an old salesman trick, they throw out a number and if you say you would take it they know at that point they just have to find your $ sweet spot.  Mineral buyers are snakes.  Sorry / not sorry if I offended any mineral buyers on this site but you really should do some cleaning up and get rid of the riff riff thats making your profession have a bad name.

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Permalink Reply by Skip Peel - Mineral Consultant on July 27, 2022 at 4:50

There are no regulations or certifications for those who purchase minerals.  Just as there are none for used car salesmen.  No offense to any car salesmen on the website.  Selling mineral is a seller beware situation/transaction.  No only do we here on GHS try to explain what is important in valuing minerals and dealing with offers, we teach members, and non-members for that matter, how to access the information that informs value.  Unfortunately, far too many either don't heed those tutorials or are computer adverse.  You just can't always change human behavior.  Just as in the early land rush leasing phase of the shale, selling minerals should include help from professionals.  Far too many just signed the first lease put in front of them and took the check/draft.  They didn't want to pay a qualified and experienced O&G attorney for advice and assistance.  It didn't matter how many times it was pointed out that the cost was negligible considering the what was at stake.

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Permalink Reply by Steve P on July 27, 2022 at 14:29

OLDDOG - I think your characterization is overly harsh, but it doesn’t matter.  Their job is little different than real estate investors who are looking down the pike and see what’s coming, and they look for landowners in the area who aren’t looking down the pike.  The old adage “let the buyer beware” applies here, but it’s let the seller beware.

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