High offers to buy minerals

I have been hearing of companys offering $12000, $13000 even $15000/ acre to buy mineral rights. So far I haven't been able to find out who is making these offers. If you've received an offer in this range could you please tell me who made it? Thanks.

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Permalink Reply by Paul Martinelli on January 9, 2015 at 10:36am

I'll sell to anyone for a fraction of this number......50K/acre!!!

046aqwyftq0soPermalink Reply by 046aqwyftq0so on January 9, 2015 at 12:15pm
I'll sell to anyone all of my assets a fraction of 50k an acre! If you all say the present value of land is worth that much, which it's not, then you all need to be going around buying land at that price. It's like buying a house to rent out to tenants for 40 Years, but paying for the house in whole as well as paying for 20 years worth expected but not guarenteed rent up front! It doesn't work that way!
046aqwyftq0soPermalink Reply by 046aqwyftq0so on January 9, 2015 at 1:12pm
So you're gonna use a company on WALL STREETs numbers? A company whose sole purpose is to make their land look the best so people will buy shares? In every unconventional play results differ and are not widespread, from curves, quality, and IPs as well as well costs, not one well is the same ever. Quit misleading people to create a false market.
Permalink Reply by jonathan M. on January 9, 2015 at 1:59pm
I assure you ed is not receiving actual royalties from production. The numbers look great on paper but unfortunately are not reality. I am receiving royalties from various producing wells I can assure you the numbers he's posted are not anywhere near what I personally receive. My wells are in the southern fairway of the utica in what is considered the core.
046aqwyftq0soPermalink Reply by 046aqwyftq0so on January 9, 2015 at 3:17pm
Exactly, my first eagleford acreage was in EOGs core area and they drilled shit wells on it and gangbusters all around. Luck of the draw I guess.
Permalink Reply by Ryan N Nyardy on January 9, 2015 at 1:47pm

That's all well and good, as I'm sure Antero has it's reasons for presenting numbers like these. I'd still like to hear from some mineral owners who are receiving royalty payments to support your calculation.

Permalink Reply by deutchen on January 9, 2015 at 12:09pm
It would be interesting to know what percentage of land under lease would get drilled during the first five year lease period. If it was only 6% or even something somewhat higher it makes selling a percentage of minerals seem a lot more attractive, even at more reasonable figures than the pie in the sky figures thrown out here.
Permalink Reply by Puzzled on January 9, 2015 at 2:35pm

The numbers thrown out here for the purchase of minerals. Are not pie in the sky in cases and areas 

Permalink Reply by Barry D on January 9, 2015 at 4:15pm

deutchen,

Although I don't have a "dog in this hunt" I do find the discussion interesting.

From my point of view it all comes down to the situation of each person. If you are financially strapped it might be a good option for you to sell ( intelligently). Or if you are bit older it might be nice to realize a financial gain for financing your dreams.

The point you make is important, when, if ever, will a landowner realize the profits of the development of the oil and gas under their property ? It's a difficult decision.

However, I, like many here, have a concern that landowners may be "ripped off" and not receive fair value when selling their mineral rights. So the questions remain; what is fair, what is pie in the sky? Maybe it's all a matter of perspective.

046aqwyftq0soPermalink Reply by 046aqwyftq0so on January 9, 2015 at 4:22pm
For a lump some, you will see years of royalties up front. If you want to achieve the pie in the sky number. You are at mercy of the operator to fully develop the acreage, which might never happen. There will be risks for both the seller and the buyer. If you are buying it's a dice throw, if you are selling its a dice throw. In some areas 1000 an acre might be too high, it really just depends on location location location, as well as being derisked or not. Then again the economy is about to crash, people will be begging for 5k an acre when there's no one buying.
Permalink Reply by deutchen on January 9, 2015 at 5:04pm
I signed a lease with Gulfport. I looked on their website & it says they have 179000 acres leased. If each drill unit takes up 640 acres & drills 3 or 4 laterals that would be 280 drilling units with 840 to 1120 laterals that would have to be drilled. I'm not sure, but I think I heard they had 7 drilling rigs. One other variable I don't know is how long it takes a drilling rig to drill a lateral. If it took a month per lateral that would take 12 years with 7 rigs to drill everything.
046aqwyftq0soPermalink Reply by 046aqwyftq0so on January 9, 2015 at 5:52pm
Don't forget the approximate 10 billion dollars it will take to drill those wells. Gulfport doesn't have 10 billion dollars for AFEs. So they have to make money back. The average IRR on a utica well is 40-60%, the best IRR is 70%, so they have to make money back and maintain the wells and pay off debt before they can move forward. It takes around a month to drill and 2 months to complete, also resting periods are used and then there will be shut ins for a number of different reasons. Take those numbers and recalculate.

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