Comment

Comment by Jeff on May 18, 2010 at 12:01pm

Hi Scott
I based my $600 per acre figure on a friend's statement from a well in the Spring Lake area of Bradford County.

Comment by Mark Bielinski on May 18, 2010 at 11:10am

Everything I have heard from Bradford county is that $1,100 per acre is the "average" 20% royalty payout over 20+ years. Anyone thinking of selling their mineral rights would have to be in dire straits. Anyone that is not being offered $5,750 for lease with 20% royalties with some (about 15) fairly good appendix clauses is getting ripped. Anyone trying to buy rights is trying to make money off of Sullivan county landowners. No insult intended Scott, but no one has talked about 15% royalty for almost a year now. $4,800 an acre to sell rights is $1000 below what Chesapeake is offering to lease...don't sell your rights unless your sister needs an operation...this afternoon.
When is someone going to start a landowners group for Sullivan? There still are almost 1000 landowners who haven't signed a lease yet...

Comment by scott brion on May 18, 2010 at 10:40am

Hi Jeff,

You might want to check your source on the $600 per acre royalty figure. In a typical 600 acre unit with a 15% royalty and a $4 gas prices the well would have to produce around 20,000,000 MCF/day to pay out $600/acre. This is almost twice as high as the best PA well's announced monthly production and the amount would decline every month. By the 13th month the production would be less than half the first month and continue to decline although to a lesser degree every month. Average monthly royalties for the first year of a single unitized well are more likely less than $100/month range but this too depends on a lot of factors including royalty %, gas price, the particular well and unit size. I agree that in general and certainly with a lack of good information it does not makes sense for most people to sell their rights, but there are many situations where a party able to make an informed decisions may well consider it. $4,800 per acre may be a great price or a poor one depending on the property and owners circumstances. Full disclosure - I am actively buying mineral rights. I live and grew up in Lycoming county and believe it is important to provide owners good information to help them make a decision.

Comment by James C McDonald on May 18, 2010 at 1:28am

Jeff,
That, in a condensed version, is why we decided not to follow up on any mineral rights offers.
Jim

Comment by Jeff on May 17, 2010 at 11:07pm

James
Sorry, I should have said $86,400 per acre after 24 months not per month.

Comment by Jeff on May 17, 2010 at 9:47pm

James,
Certainly everyone has to make up their own mind. But unless someone is in a real money bind it is common sense not to sell them away. James McDonald said he was offered $4,800 per acre. The current return per month per acre is around $600 an acre with only one well in the unit. The first two years are the best so lets times that by 24 months and that is $14,400 per acre. Let's say that your unit has 6 wells then that is $86,400 per acre per month. If you are in it for the long haul then certainly the well rates drop perhaps as much as 70 percent so then it would be $180 per month per acre per well. That is if the price of gas does not go up. Also, if a person sells their rights someone else calls the shots on your property. It would be a greater long term gift for an older person to will their children or grand children the mineral rights.

Comment by Jeff on May 5, 2010 at 10:37pm

Don't sell your rights away. They are worth far more.

Comment by James C McDonald on May 5, 2010 at 6:05pm

It is my understanding that you keep the "Bonus Money" but all royalties go to the company buying your mineral rights. It's a one time payment made shortly after the agreement is signed (you don't have to wait for the drilling process to begin). If the royalties exceed their payment to you - they win. If the royalties are less than the payment - you win.

Comment by Keith Billet on May 5, 2010 at 2:33pm

What happens to your Lease monies and possible Royalties?

Comment by James C McDonald on May 5, 2010 at 1:34pm

I received an "Offer to Purchase" letter for our mineral rights from MC Minerals Co. for $4,800 per acre. I contacted our lawyer in Williamsport to see if it was fake. He informed me that it was a real offer and a lot of money.
Has anyone else received a document like this recently?
Jim

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