Are mineral sales dead due to low oil prices?

Hi, I am known to some of you having done yours or your neighbors' mineral appraisal for estate, probate, sale or other purposes. Now, I wonder, if actual sales of mineral interests have stopped. I used to track such sales in court house records and use the old data for sales comparison to estimate the value of the mineral property of my new clients.

The offered price in $ per acre should have gone down somewhat due to the drastic drop in oil prices, while natural gas prices did not drop as much. Also, the drop in drilling and completion activity would influence the market. Has anyone seen that happen? Or did the offers simply dry up? If you know of any recent offers, please tell me about them.

We are entering a period of "bottom fishing" when some of the small operators, if saddled with a lot of debt, become targets for takeover. Therefore, operators will change, and so will their drilling and completion strategies. A lease may be held, if drilling has started; but just drilling will not frack and complete a well. There will be no royalty income in the near future. Therefore, the underlying mineral rights are worth less under "only drilled" wells as compared with wells being prepared for completion and production.

I am currently appraising some mineral properties in Moorefield Township in the area where American Energy overlaps with Gulfport. There are several new wells drilled by American Energy, but are they "just sitting there" holding the leases, or are they being prepared for completion? And what about pipelines when you get north of the completed Gulfport wells along Piedmont-Cadiz Highway 22?

Regards to all my local acquaintances!

John Gustavson, Certified Minerals Appraiser

 

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Permalink Reply by Utica JOE on March 24, 2015 at 5:04pm

John,

Please send me a personal message. I am currently putting together Ohio Mineral metrics that track the sales and per acre amounts paid. 

Permalink Reply by John B Gustavson on March 24, 2015 at 5:19pm

I do not quite know how to send "a personal message". However, my Email is johngustavson1@aol.com and you are welcome to drop me a note. Yes, I would be interested in sharing with you my lists of comparable sales. 

John

Permalink Reply by Jonathan H on March 24, 2015 at 5:07pm

One is, the other is not, however I have since heard that they are a broker and not actually a buyer - they asked me about signing a 30 day option to give them time to shop my property around and I declined to sign.

Permalink Reply by John B Gustavson on March 24, 2015 at 5:23pm

Smart to say "No". Unless the optionee is ready to put 10% on the table as the price of the option (and give him 3-6 months)!

John

Permalink Reply by Jonathan H on March 24, 2015 at 11:25pm

I talked to a buyer recently and they said they had been approached about a property that sounded like mine, with enough details it likely was, so they were shopping it around without the option and without telling me - they never told me they were a broker; they made it sound like they were a buyer.

Permalink Reply by John B Gustavson on March 25, 2015 at 1:29pm

Yes, it is exactly like the real estate business. There are true buyers and true sellers, and there are all the go-betweens!

Permalink Reply by lance on March 26, 2015 at 10:28am

Hi John, My land is leased to A.E.U. now for a 20% royalty. Lease is up in 16 months. I am not yet in a drill unit but drilling is going on all around me A.E.U. just offered to buy my minerals and said they would beat any offer. So far I've had an offer of 10k per acre. I am located in Guernsey county in Ohio Utica. I have had other offers recently by Gateway Royalty, LLC and Strategic Land Partners, LLC among others like FlatIron. I will wait it out to see if A.E.U. reups my lease at a 5k sign up bonus in 16 months. Smart move?

Permalink Reply by T.Fiore on March 25, 2015 at 4:33pm

Any idea on prices for Pulaski twp, PA ?

Permalink Reply by John B Gustavson on March 25, 2015 at 4:37pm

Sorry, no. I have not worked there recently.

John

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