Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on July 30, 2018 at 15:35

Now youre in the right place, Milton.  $2,770/acre for a sale of your mineral rights is a crummy, low ball offer but don't expect much better until development gets to your immediate area.  If you consider a sale in the future, getting good lease terms will be important to the value.

Permalink Reply by Caddo Rat on July 30, 2018 at 16:40

Which company made you an offer?

Permalink Reply by Milton Hawkins on July 31, 2018 at 7:37

I took a telephone call from an individual in the Tyler/Palestine area who expressed interest in leasing but indicated no company affiliation.  I figured the lease document would reveal all the information I needed, but I haven't received one yet, and am beginning to think I may not.  The offer was by all accounts too low and for too long a period, so I'm not concerned.

Permalink Reply by EastTexasFarmer on July 31, 2018 at 15:22

Milton, the only active Operators in your area are BP / Blackstone (north Angelina - Haynesville / Bossier Shale) and Cobra Oil and Gas (south Angelina - Manning Field / Bossier Sands). Since the Haynesville pinches out in your area, I don't think it's BP (my opinion). You'll get a better deal if you lease directly with an Operator.

As a FYI, bonuses and royalty offers are lower now (compared to several years ago) since the natural gas market is so bad and newer well / completion technologies are more expensive for the Operator than before (although they are more efficient and typically produce at higher volumes). However, I do agree with Skip. Your tentative lease is a starting offer, so you may be able to do better with a counter offer. Regarding competitive lease terms, talk to your neighbors since the leasing will likely involve contiguous tracts to build out the units, and they should be talking to the same broker that you’re talking to.

Offers to purchase outright minerals in the north are mostly dependent on the location of these minerals to major Black Stone tracts that are under development. I don't think the offers are applicable to your area, but I could be wrong. Again, unless you have an emergency financial need, I recommend that you retain your mineral rights.

Good luck.

Permalink Reply by Milton Hawkins on July 31, 2018 at 15:33

Thanks again.  I expect to keep the mineral rights.  Even at 15% for long-term capital gains, it's more than I want to pay.  I'll leave that sale decision to my daughter who will inherit.

Permalink Reply by Sod Holder on August 1, 2018 at 15:11

I am north of you above 103 and when we were offered a lease the terms were about the same from Blackstone.  They came up some but not a lot on the lease money and a little better on the royalty, so I would think that with this being a third party you could do better since they are planning to make a profit also.  We are due a well in the near future and just a month and a half ago Blackstone offered to buy some minerals for 3 times the amount you mention and that was negotiable for a little more but not much.  Hope this helps some.

Permalink Reply by J B Nabors on November 20, 2023 at 13:04

Current leasing offers in Highway 69 area SE of Lufkin.  Black Stone (low ball) and Silver Creek Resources making the offers $4,500 - $8,500

also $15,000 just north of Lufkin 

Permalink Reply by Skip Peel - Mineral Consultant on November 20, 2023 at 13:08

Thanks, JB.  Can you provide a little detail?  The bonus per acre offers appear aggressive in this low price environment but are hard to evaluate without knowing the royalty fraction part of the offer.

Permalink Reply by J B Nabors on November 21, 2023 at 9:02

Sorry, Skip!  All info I report is 2d hand from my BIL, who owns a tract along Highway 69 just West of Highway 326 intersection. He told me the current offers are for 3/16 royalty.

Permalink Reply by Skip Peel - Mineral Consultant on November 21, 2023 at 9:25

Thanks, JB.  When I read the bonus offers I was suspicious that the royalty was low.

Permalink Reply by lee on November 23, 2023 at 1:15

There is no way they are offering $4500 to $8500 to lease, must be to sell.

Permalink Reply by Skip Peel - Mineral Consultant on November 23, 2023 at 2:35

lee, I see offers in this range regularly when a lessee is offering a crummy low royalty fraction.  That's how much more valuable the royalty is compared to the bonus.

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