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Permalink Reply by David Smith on April 9, 2009 at 23:20

where does the 8 come from?

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Permalink Reply by herefordsnshale on April 9, 2009 at 1:27

Bear with me, I'm having a hard time grasping this, you own MORE royalty acres than surface acres? My thinking was you only owned the percentage that you got in the lease. For example, if you owned 10 acres leased at 25% you owned 2.5 acres and the O & G company owned the other 7.5 acres for as long as the lease lasted.

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Permalink Reply by herefordsnshale on April 9, 2009 at 2:23

I learned something new today, I did not know this but then I am fairly new to mineral issues, only starting following them last year. So you're saying that royalty acres are 8 times the surface acres--10acres unleased means 80 royalty acres?

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Permalink Reply by Todd M. Baker on April 9, 2009 at 8:42

So if you owned 640 acres leased at one eighth you own 640 royalty acres???????????????

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Permalink Reply by Bobi Carr ("parker") on April 9, 2009 at 10:02

Todd,

yes!

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Permalink Reply by herefordsnshale on April 9, 2009 at 12:06

Hi GD, yes I think I'm getting the jest of it. About a year ago when the HS first broke I spoke to a supposed expert in the business about selling minerals and he did not explain it to me this way. He told me that if I had leased at 3/16 that was all the minerals I had, the O & G company had the other 13/16. Either I misunderstood him or he gave me bad information, I'm still not sure which. But anyway looking at it this way puts it in a new light. So thanks to Jim for the explanation and Skip--sorry about hijacking your discussion!

They are clearing a ROW for the PL you were talking about to tie that well in to a main line. There is also a pipeline surveyed for the well in section 19, where they've already built a pad as well. I've don't have any firsthand knowledge of wells being shut in but I wouldn't be surprised. Drilling is still going on on that side of the river too though. I just finished two appraisals for Conoco-Phillips CV wells in Panola County.

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Permalink Reply by Bobi Carr ("parker") on April 9, 2009 at 12:14

herefordsnshale,

You should read Dion's blog titled, "Royalty: Or, What Did I Just Sell to That Guy?"

It addresses the discussion very well.

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Permalink Reply by herefordsnshale on April 9, 2009 at 12:20

I'm going to go back to it, I tried to read it before but had a bit of a problem following it. This puts things in a different light for sure. Ip's 13,000 acre sale last year: if they were unleased on that acreage that means they had 104,000 royalty acres. The sale price was $263,000,000. That comes to $2529 per royalty acre.

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Permalink Reply by Bobi Carr ("parker") on April 9, 2009 at 12:26

Or $20,232 per net mineral acre.

Also don't forget the tangle of trying to figure out what IP owns and what they don't own.

I wouldn't use them as a comparison. I think it is apples and oranges IMHO.

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