Replies to This Discussion

Permalink Reply by Mac Davis on October 26, 2009 at 8:00

There's no "efficient price discovery mechanism" for the price of something like this. On a stock, gold, etc. there's a standard item and a marketplace where many buyers and sellers will set the "correct" price.

In concept, the price should be set based on a "Discounted Cash Flow" basis or some other mathematical calculation based on expected earnings over time.

Unfortunately, there's not necessarily good data on expected earnings over time. More importantly, there's not an "efficient" marketplace where you're selling a "standard" item that multiple experienced buyers and sellers are competing for what you're trying to sell or buy.

There are some people I consider to be scam artists out there. They make ridiculously low priced offers, expecting to find some gullible mineral rights owners who will sell out for a pittance. There are some landowners with unrealistically high expectations of what their minerals are worth.

It sounds like you're saying there's not a producing well yet. Throw in more uncertainty. Throw in questions about exactly who owns what rights, etc.

Throw in that natgas has gone between $2.50 and $13 or so in the past few years. Throw in uncertainty about what the morons in Washington are going to do about energy and tax policy.

To make a long story short, there's no "real" meaningful answer.

• ▶ Reply

Permalink Reply by The_Baron on October 26, 2009 at 8:08

The price is what someone is willing to pay, AND someone is willing to accept.

Other than that, good luck.

• ▶ Reply

Permalink Reply by Mac Davis on October 26, 2009 at 12:05

That's more or less true about anything you're buying or selling.

You can usually get a rough idea about what a house or land will sell for. You can look up used car prices in the blue book. Stock or commodities have prices you can look up on exchanges.

The problem in this case is that there's no good process to figure out what you're likely to be able to buy or sell mineral rights for.

Or does anyone have any suggestions for figuring out a "fair market" value for mineral rights such as this? Apparently Baron and I have no hints.

• ▶ Reply

Permalink Reply by Jed Clampett on October 26, 2009 at 18:00

Thanks for everyones help , From what I gather even though a nice lease bonus was paid with 25% royalties on this property , Unless a well is drilled within the 640 acre section that this land resides in there may never be any royalties paid ? Is that how royalties come about ? I guess the next step would be to check and see if any wells have been drilled in that properties section ?

• ▶ Reply

Permalink Reply by Bobi Carr ("parker") on October 26, 2009 at 18:04

I can't imagine that ANY property on the Caddo/DeSoto line won't be drilled. When? Who knows. I have a friend that is stuck with a nasty vertical well that has the section held by production. 5 acres @ a few dollars a month. It should be good "sometime". Is sometime 5 years? 10 years? or next week? Who knows, but you can darn sure bet that if I had those minerals I wouldn't be selling them?

• ▶ Reply

Permalink Reply by Jed Clampett on October 26, 2009 at 18:26

The lands location off of Baron Rd should be in a hot production area. I looked at a map showing the wells that have been drilled in the play and when you look just north or south of the caddo / desota line its one of the most drilled areas on the map. Im wanting to buy this property for my 16 year old daughter to have as a little extra something one day. I have property in n bossier parish but who knows if anything will ever come of that area.

• ▶ Reply

Permalink Reply by Bobi Carr ("parker") on October 26, 2009 at 18:34

Yeah. Texas looked like it was a red headed step-child. It doesn't look that way any longer.

• ▶ Reply

Permalink Reply by Jed Clampett on October 26, 2009 at 18:43

im in e texas with lots of activity but most landowners over here dont owne there properties mineral rights because texas law lets the original owner keep them forever then there kids inherit them and so on. unlike in louisiana where if no activity takes place after 10 years the rights go to the present owner of the land

• ▶ Reply

Permalink Reply by Mac Davis on October 27, 2009 at 6:47

So many people think of Louisiana government as backwards and corrupt that we sometimes fail to appreciate that they sometimes do get things right. God bless the LA government for the 10 year limit. I wish other states would follow this example.

Look up "broad form mineral deeds" in Kentucky, for example. 100 year old inactive mineral claims were used to allow companies to strip mine land that the property owners had no say in. I think Kentucky may have finally fixed this somewhat, but I'm not sure. There have been a long string of lawsuits and law changes.

• ▶ Reply

Permalink Reply by sesport on October 26, 2009 at 17:07

What about going by what state lease bids go for? :0)

• ▶ Reply

Permalink Reply by Bobi Carr ("parker") on October 26, 2009 at 17:44

It's like asking what a certain "stock" is worth. It depends when you are asking what else is going on in the world and who you are asking.

• ▶ Reply

Permalink Reply by Lrb2brnot2b on October 26, 2009 at 18:05

If that is what you want to do, go for it. The rest of the world shouldn't have to drive down that road. If I want to sell something I will set my own price. If I want to buy something I will make an offer. We should not always have to have some stinking government agency envolved in every aspect of our lives.

• ▶ Reply

• ‹ Previous
• 1
• 2
• Next ›
• Page