Replies to This Discussion

Permalink Reply by herefordsnshale on April 7, 2009 at 11:56

Was this in an area that is going to be drilled pretty soon? It seems like these offers only pop up just before drilling. Not exactly big risk taking on their part!

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Permalink Reply by Skip Peel - Mineral Consultant on April 7, 2009 at 12:11

herefordsnshale. The section is under a HA unit order to Encana but there are no HA well permits listed on SONRIS. Considering the location, drilling does not have to be imminent for an interested party to make an offer. Many investors are more concerned with the probable operator of a section. As is demonstrated in the discussions on the site daily, some operators are more capable than others. And some are just not capable ... period. I am just attempting to do some due diligence on Empire and had hoped some of the members may have had dealings with them.

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Permalink Reply by Skip Peel - Mineral Consultant on April 7, 2009 at 13:13

Jim. The Empire offer was no "low-ball". I consider it a reasonable "fair market" price. If I can determine Empire to be a reputable company, I will probably advise my client to accept.

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Permalink Reply by herefordsnshale on April 8, 2009 at 11:53

It's interesting to know there are "serious" mineral rights buyers out there. The best offer I have ever seen for minerals was $10,000 per acre, that was in DeSoto Parish, where drilling was imminent. I've always believed selling minerals is a bad idea in most cases, but there are certain circumstances where it makes sense. If someone were to make me a good offer for my minerals, with the mess my section is in right now and knowing drilling may be some time away, I'd certainly consider it.

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Permalink Reply by Two Dogs, Pirate on April 8, 2009 at 12:04

I saw an offer in DeSoto around Thanksgiving for $18,000 per acre.

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Permalink Reply by herefordsnshale on April 8, 2009 at 14:08

When this site first came out, selling mineral rights was a hot discussion topic. I remember there were people wanting to sell mineral rights for astronomical amounts, six-figure prices per acre. I don't think any of them had any takers. From what I've learned so far, my thinking is that a price for mineral rights should be, at the very least, three times the lease bonus for the area.

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Permalink Reply by Two Dogs, Pirate on April 8, 2009 at 14:17

This offer was to an institution that only had a mineral interest for two more years on a reservation. The time clock was ticking but the entity that would get the mineral interest would be a hard ball player. I don't think CHK will want to let the mineral interest die that they have a lease on.

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Permalink Reply by Bobi Carr ("parker") on April 8, 2009 at 16:25

I haven't seen the offer from Empire, but someone posted it in the Sabine group about a week ago. They said it was $3200 for 10% of a 25% royalty.

I doubt it is $32,000 per acre for 1/4th royalty, so I ASSUME (dangerous - I know), $8,000 per acre for the entire 1/4 royalty.

Has anyone received this offer? If so please post what the ACTUAL offer is.

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Permalink Reply by jffree1 on April 9, 2009 at 4:29

Hi Jim Krow, Thanks for this instructive and informative post. Is the calculation (above) the same for Texas? I have seen some very large units over here. Does the unit size have any effect on the royalty acre calculation? Please elaborate.

JF

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Permalink Reply by Bobi Carr ("parker") on April 9, 2009 at 5:05

jffree,

The 5120 is computed by multiplying 8 X 640, so if you have a larger unit you would use the acreage for that unit.

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Permalink Reply by Bobi Carr ("parker") on April 9, 2009 at 5:09

That's what I said, but you say it better.

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Permalink Reply by jffree1 on April 9, 2009 at 5:13

Thank you both.

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