Minerals/royalty buyers

Has anyone been approached by mineral and royalty buyers? And, if so what are the prices offered for each respective area? I am considering selling due to my age and any information would be helpful. Thanks...

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Permalink Reply by Deer Hunter Bob on February 27, 2013 at 9:49am

selling is for some people and not for others..  it is a fact that drilling takes a long time.. its a fact that wells have a definite decline curve.. its a fact that buyers are buying to make money... expecting to get 10 years worth of an 'estimated' royalty based on rumors is impossible.. i know people who have sold and they say "we bought this farm 40 years ago with no intentions of oil and gas and if we can sell now and become debt free and secure the rest of our lives then our farm has given us all we could ask for."    and I know others who say they will never sell because they feel the royalties will be huge..  i personally know a person who was receiving almost $20,000 per month in royalties and within 2 years its down to $6000 per month.  he has a range well in washington county pa on his 82 acres..   if you decide to sell you should work with someone who helps get the best price.. someone that knows oil and gas and can market your asset properly.. working with a direct buyer is tough to get the best price because they try all the tricks like put deadlines on you and say its going to drop tomorrow..  best of luck either way!

Permalink Reply by 0llbnp780fs53 on March 5, 2013 at 6:40am

Bounty Minerals $5k-$7k in Columbiana County

Permalink Reply by 0llbnp780fs53 on March 5, 2013 at 6:52am

Is it $10k/acre to BUY mineral rights or for an Over Riding Royalty?  My post above ($5k - $7k) is for an ORR.

I'd say $10k/acre in Belmont County Ohio for an ORR is the highest price that I've heard. (Not that I get out much).

$10k / acre to BUY mineral rights... I'd personally see that as insulting.

Permalink Reply by brat on March 5, 2013 at 6:58am

Just so I understand then, your $5K -$7k per acre is for over riding royalty , but at what percentage?  Is it the usual 1/8 we landowners use to get?  Had not heard of anyone getting $10k/acre for anything..that would be good news.

Permalink Reply by 0llbnp780fs53 on March 5, 2013 at 7:02am

This is second hand, but the person who is talking to Bounty has one existing well at 1/8 on one property and a newer lease around 15% on the other property.  But the guy is talking to him about a set price across all acres that he's willing to sell ORR on.

Permalink Reply by brat on March 5, 2013 at 7:09am

Got it, thanks

Permalink Reply by Dana Lang on March 5, 2013 at 8:14am

I'm in Mercer Co. Pa. ,and own 59 acres HBP. I think I'm selling 29 acres min.rights to Bounty at $4,000. per. and keeping the other half to hedge my bets when  and if a well hits close by. How does that sound to you all ?  What is an ORR? my head is spinning.

Permalink Reply by 0llbnp780fs53 on March 5, 2013 at 7:19am

Also, to be clear, I have a list of about a dozen companies that are buying ORR and some have made offers as low as $2000/acre.  Others have offered more, but MIGHT be using a bait/switch to get you to talk with them and ignore the others competitors.  These are all for purchase of Overriding Royalty Rights, NOT, NOT, NOT, NOT for the purchase of mineral rights.

(An ORR is constrained by your existing lease and goes away when your lease goes away.  The sale of your mineral rights are permanent and you no longer own it or have control over what people do to get at the minerals.)

Permalink Reply by brat on March 5, 2013 at 7:31am

I was considering an offer to buy my gas/oil mineral rights on just a portion of my 122 acres.  The whole 122 acres is HBP by one producing gas well, an old clinton lease.  This lease grants me unlimited gas for my one home.

I now wonder if I sell a portion of the lease, if that changes my old lease, and do I still get the free gas ?  (the well that is producing the gas is not on or even close to the acres I thought about selling the gas/oil minerals....Haven't talked to an attorney , yet, but of course will in the future.

Permalink Reply by 0llbnp780fs53 on March 5, 2013 at 7:40am

Have your attorney look at Overriding Royalty Rights.  It is a lower number/acre, but then you can still sell the mineral rights later if you want.  (OR you can sell the mineral rights but retain ORR to yourself from the existing lease).

My problem with selling mineral rights is that the new owner may want to mess up your entire surface area to get at them.  What if coal suddenly is $100,000/pound... you can bet they'll be strip mining even those little 2 foot seams that our water wells are dug through.

I don't think you can change the existing lease itself no mater what you decide to do.  That would require the owner of the lease to agree to what ever change you want.  You can only sell or retain your financial interest in the lease.  That is called an Overriding Royalty Rights Interest (as in their financial interest in the lease is based on your base lease, when it goes away, their interest in the royalties also go away).

Permalink Reply by 0llbnp780fs53 on March 5, 2013 at 7:57am

Looking at the "Royalty - Gulfport..." sheet, your "Then the TOTAL value of well Production is" value never changes?  Not sure what it is calculating against. 

Also, you have used 21% royalty on a 198 acre drill unit (wouldn't 640 acre drill unit be more realistic when all is said an done?) as your basis for coming up with your $10k value.

You have 18.69 MMcf as an initial DAILY production.  That sounds pretty high to me.  Have any wells even had initial tests that high?  Can you provide a link to where wells maintained that level of production for a month (as would be needed to make your numbers accurate?)

I have no way of figuring out where to even check the number of 945 Bbl NGL daily production, but that also seems like a high rate to maintain for a month.

Also, remember that these companies are buying ORR as an investment and they do need to actually make a profit above what they pay for them.

Permalink Reply by 0llbnp780fs53 on March 5, 2013 at 10:26am

good luck to you

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