Today we received a letter from BCF Minerals. They are offering quite a lot to purchase our mineral rights which is in the Brinker Storage Field. We have just over 22 acres, they are offering $96,894 valuing the minerals at $4,200 per net acre. That seems rather strange they would offer so much when there is a good chance they won't get anything out of this, does anyone else find this a little strange. Of course I am not selling to them but just wanted to hear if anyone else has had a letter like this. Things seem to be heating up in the storage field.
Many landowners on and off the storage field have received these letters recently. I am fairly sure BCF has no idea the storage field exists and would not follow through with the purchase once the title search was done.
Considering recent properties were leased for over 1600 more per acre, the offer is laughable.
Lease prices and buying prices are not something that are easily compared. A company that leases someone gets 80-87.5% of the proceeds from the well. A mineral owner gets 12.5-20% depending on the lease. If you leased out 80% of your royalty for $5,000/acre why would I buy 20% of it for the same price?
There was recently a landman position listed online for buying O&G rights in Eastern Ohio giving the landman a small % of future royalties of every acre. It said the average compensation would be $500,000 a year over the next few years. Sounds like there is a good profit in purchasing the rights!
Man, I should have gotten that job instead of the one I have now. To be fair that number is pure speculation and probably falls under the "poetic license" portion of the advertising for such a job. I remember in high school Army recruiters telling me quite a few things in order to entice me to voluntarily get shot at. I'm thankful that there are men and women who were far more brave than I was.
Take the money and run!!!!!!!!!!!!!!
The company that stores the gas in the storage field holds all the rights (shallow and deep). There have been several big lawsuits here in PA between Dominion/PNG and shallow operators regarding deeper rights in a storage field - who controls what. The Commonwealth Court of PA sided with the storage operator saying that they control those rights.
Sounds like BCF Minerals doesn't know recent case law.
According to the original post this company is offering to BUY his minerals, not lease rights for exploration and production. Absent this individual having already SOLD his mineral rights to the owner of the storage facility then this proposed transaction doesn't conflict with a previous lease for storage operations.
No, but the storage issue diminishes the value of said minerals.
Apparently not to the company that offered him close to $97K for them!
That was a form letter sent out to everyone. Once they see the storage issue they may walk away from that offer.
I'm not up to date on the lawsuits you mention, however I can say that CHK has leased (and paid for) tons of property that include a large storage field in Beaver County Pa. I believe they have already drilled underneath the storage field and are about to drill another that has legs going under the storage field for sure. Maybe CHK has struck a deal with Columbia Gas, I don't know. But the fact remains that what you state appears not to be true in all cases. Maybe the lease for storage in our area is different, dunno.
It will be interesting to see how this plays out.
As a follow up, I do own my deep rights as I have a lease from 1988 which specifies that Columbia only has storage rights and it gives depts of the berea both layers. It is really funny how you never know you have something and then all of a sudden every gas and oil company is looking for property to buy or lease. I think there is more than meets the eye under the Brinker. But you know, I really don't need to be rich but I don't think we should be cheated out of what we have and I have a lease that was signed to Chesapeake but now shows as Total E&P on land owners site. It will definitely be interesting to see how this plays out. I was reviewing a newspaper article and according to it, there is a permit on a site not 1/4th mile from us and on the same road we live on. Haven't seen anything to say just where the well would be if they drill though. As Graig said, I think that Chesapeake has struck a deal with Columbia also.