Section 23, T17N, R15W - Mineral Rights Offer
We recently received an unsolicited offer from Cora Minerals. Our 25% royalty payments have been very small in the last couple of years. In 2022, the royalty payments were practically nothing. We own around 12 mineral acres. The offer is $16K/acre. Is this a reasonable offer? Has anyone worked with Cora Minerals? Has anyone received offers near my location?
Thank you in advance for your help.
Vickie
Views: 1041
Replies to This Discussion
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Permalink Reply by Cole Prothro on
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If they offering to buy it’s only because there are plans to drill in the near future 16k isn’t much money at all if they come punch a couple wells that are flowing a billion cubic ft of gas a month never sell royalties is my motto
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Permalink Reply by Ryan Howrish on -
Good morning Vickie - looking at the DNR public hearing website (http://www.dnr.louisiana.gov/index.cfm/page/779), CHK applied to drill 4 additional cross-unit laterals across Section 23 on Dec 13, 2022. This is the reason you are receiving offers on your minerals today. Note that because the planned wells are cross-unit laterals, your payment or net revenue interest will be lower than it is on the existing single-unit well.
The application to drill additional wells does not guarantee that any or all of the wells will be drilled imminently. However, it is a good sign that the operator is planning to further develop your minerals. There are smaller operators (Blue Dome, Silver Hill, Paloma) that are active in the immediate area which could be encouraging CHK to come back and develop units with wells that are of older vintage.
Historical well performance is this area is poorer than the core of the play with modern wells averaging ~0.36 bcf/month over their first 6 months. The biggest risks/questions for mineral buyers and sellers are when will new wells come online and what will the commodity price be over the first few years of a wells life.
The reason you received this offer is that mineral acquisition companies view "pre-permits" or amended field order applications as way to reduce their risk on the timing of new well development.
Ryan
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Permalink Reply by Skip Peel - Mineral Consultant on
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Vickie, you should have received a notice letter for the Chesapeake application for alternate unit wells that include your section. I'll post a link to the application with well plat below. It appears that the offer you received is for $192,000 ($16,000 x 12 acres). If so, I would consider that to be a fair market offer. There is always the chance that Cora Minerals may be attempting a bait and switch as that happens occasionally. I'm not familiar with Cora. I'm seeing more group well designs by Chesapeake that are "up spaced". That means bigger fracs and fewer laterals per section/unit. Although there would be four new wells for your unit, note that three are the full length of the section and one is only 330' in Section 23. 17N-15W is too far north for economic Bossier Shale, therefore if Chesapeake chooses to drill all these wells together that will mean your section would be fully developed. These are facts that I hope will help you to make a decision. If you are leaning to selling, the only other thing that I would add is that the sale of minerals owned longer than 365 days qualifies for federal long term capital gains tax which would be 15% on a sale of $192,000. Just as every mineral owners specifics are unique so is their tax situation. It's always to good to consult a tax professional.
https://ucmwww.dnr.state.la.us/ucmsearch/UCMRedir.aspx?url=http%3a%...
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Permalink Reply by Skip Peel - Mineral Consultant on
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Vickie, there is a unit survey on file for your section. Since I do not see a tract listed in your name, I suspect that it is technically owned in another name. If you don't wish to post that in an open discussion, you can post it on my private page. You might have to send me a friend request to do that if you are not already a friend. If you don't mind posting it here, I'll post a link to the unit survey.
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Permalink Reply by ELLIS HUGH on
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Is there a way to view Permit to Drill Applications before they are approved? Or is it only public record once the permit is approved?
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Permalink Reply by Skip Peel - Mineral Consultant on
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No, Ellis. Applications for field orders (formation of drilling units and spacing for alternate unit wells) are entered in the database prior to the hearing date. Once those applications become field orders, they are effective indefinitely unless amended by a subsequent field order. Permits to drill are entered in the database on the day they are approved.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Vickie, here is a link to your unit survey.
https://ucmwww.dnr.state.la.us/ucmsearch/UCMRedir.aspx?url=http%3a%...
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Permalink Reply by Vickie Atha on
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Our last royalty payment was in August 2022 which included productions in Mar,Apr,& May. Where can I find production data for my unit? I reached out to Chesapeake Owner Relations but have not heard back. Thanks in advance.
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Permalink Reply by Ryan Howrish on
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Hi Vickie - you can find production data for your unit on SONRIS. Here is a link to the well details in your unit: Well Details.
There are a couple of different ways to access the data. The first is using the SONRIS map located HERE. I find it easiest to zoom into the approximate area and then turn on the township and section layers under BOUNDARIES. Then turn on Haynesville wells under the Oil and Gas heading to see the wells.
Another way to get to the well details is to use the Well Information form on SONRIS. A link to site is HERE. If you know the API number of the well you can enter that to search for the specific well.
If you have any issues accessing the data or the site let me know and I can provide more detailed instructions.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Vickie, using the first link that Ryan posted, scroll down the well file form to the section that is titled LEASE\UNIT\WELL ASSOCIATION HISTORY. This the where you will find the production for your unit. I've cut and pasted the last eight months of reported monthly production. Your unit well is depleted and that is the reason for Chesapeake to begin the process to drill alternate unit wells.
LEASE\UNIT\WELL ASSOCIATION HISTORY
EFFECTIVE DATE
END DATE
LUW CODE
LUW TYPE
LUW NAME
REPORTING PCT
PRIMARY LUW FLAG
04/04/2011
2-UNIT
HA RA SU78;LCD&S 23-17-15 H
N
LEASE\UNIT\WELL PRODUCTION
RPT DATE
LUW CODE
STORAGE FAC
DOC USE
WELL CNT
OPENING STK
OIL PROD(BBL)
GAS PROD(MCF)
DISPOSITION
CLOSING STK
PARISH
11/01/2022
1
0
0
7
0
0
CADDO
10/01/2022
1
0
0
0
0
0
CADDO
09/01/2022
1
0
0
0
0
0
CADDO
08/01/2022
1
0
0
0
0
0
CADDO
07/01/2022
1
0
0
4
0
0
CADDO
06/01/2022
1
0
0
0
0
0
CADDO
05/01/2022
1
0
0
533
0
0
CADDO
04/01/2022
1
0
0
117
0
0
CADDO
03/01/2022
1
0
0
706
0
0
CADDO
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Permalink Reply by Vickie Atha on
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Thank you! Great info.
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Permalink Reply by Vickie Atha on
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Thank you. This is very helpful!
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