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 Jeffrey Beunier on January 11, 2015 at 8:29am
Dan, I enjoyed reading your post, and think it was one of the most thoughtful out there. There are no absolutes in any business, industry, etc. and there are as many reasons to hold onto your minerals as there are to sell them.

Many of the statements on this thread seem to be 'absolute' arguments one direction or the other. I find it odd that someone would tell someone else that they are 'stupid' for making a decision about their property without walking in that person's shoes.

The arguments about 'doing it for the children' seems to ignore the fact that whether you sell or not, you would still have an investment asset - if you sell, it maybe in the form of stocks, bonds, real estate, or whatever asset into which you decide to redeploy the cash you recieve. If you don't sell it, the. It will be in the form of your minerals rights.

Either way, there is a potential asset for 'the children'.

The critical questions are how concentrated do you want your position to be, and how much risk do you want to take - a single asset or a diverse group of assets? If you are sitting on an absolutely goldmine, and it's an absolute sure thing - then fall asleep at night smiling, knowing your financially secure. If there is uncertainty, well, still fall asleep knowing that at least you are fortunate enough to have options to create financial security. But once again, I don't think anything in this world is 'absolute', so unfortunately for me, I will be always trying to fall asleep thinking about how to provide additional security blankets for myself and my loved ones.

Investors buying minerals are in it for the money, just like everyone else in the world. I'm not sure how many people wake up in the morning and say, "gee, how can I lose money today". So I'm not sure why there is this underlying desire to make villains out of them. There are probably a bunch of bottom feeders or ones less than ethical, but there are as many trying to make a living by making smart acquisitions for themselves and investors. That's kind of the way the world works. Options make the world go around, and they are providing options, none of them probably do it the same way.

What is an appropriate rate of return to earn in that investment, that depends on many factors from the risks associated with the underlying assets (geology, surface rights, operator, offtake) to macro risks such as oil and gas prices. For some mineral owners, taking on those risks might not matter for others, they may just want to replace that risk/return scenario with a different one.

At the end of the day, everything is in the eye of the beholder and as you pointed out Dan, everyone's circumstances are as unique as their fingerprints. So thank you for interjecting some logic and rational back into this discussion thread.

Have a great rest of your weekend.
Permalink Reply by Dan Warner on January 11, 2015 at 8:59am

Thank you.

It was never my intent to paint everyone with the same brush, and that includes landmen.  My real understanding of that industry is mostly anecdotal, with a little personal experience thrown in.  Still, it doesn't take a lot of imagination to understand that the land and title industry, as a stand alone industry, derives their profits from the difference between what it's worth and what they can convince the owner that it's worth.

Permalink Reply by David Allen Lilly on January 11, 2015 at 9:38am

You guys have made long, complicated comments covering many topics.

I don't need to, because the issue is quite simple.

Selling your mineral royalties is giving your money away, period.

These investors pick on folks too stupid to understand what they are doing, folks highly misinformed and those in tough economic situations.

Think of it this way, they are going to give you $15 dollars out of every $100 YOU are entitled to from YOUR royalties.

As I said earlier, do what you want with your royalties, no hard feelings either way, but to me it is stupid to the extreme to sell your mineral royalties, period.

Permalink Reply by Dan Warner on January 11, 2015 at 10:17am

Seems that the discussion hasn't ended for you after all...

I'll try to stay more on topic for you.

"These investors pick on folks too stupid to understand what they are doing, folks highly misinformed and those in tough economic situations."

...as do landmen.

I can't imagine why there would be hard feelings simply because a stranger disagrees with you, ...unless, of course, he calls you stupid.

How ridiculous is it to say that, no matter the numbers on either side of an equation, it's always wrong?

Permalink Reply by David Allen Lilly on January 11, 2015 at 1:56pm

Tell me how it isn't stupid to give your money away, the money you have now or the money you will receive in royalties.

No matter how you slice it, anyone who sells their royalties is giving money away to folks who are wealthy to begin with.

You fixated on the word "stupid" because you cannot refute my contention.

Money folks are slimy, they have been here asking me to invest my royalties with them.

Yea, good luck with that.

Anyhoo, do what you want with your money, but stupid is as stupid does, and giving money to folks already considerably wealthy is stupid.

Permalink Reply by Dexter Green on January 12, 2015 at 7:08am

The problem is your opinion ignores the economic realities for some people.  Some people are in a tough spot and cannot wait years down the road for wells to be drilled.  Calling them stupid is not a real argument.  It is elitist snobbery of the highest order.

Permalink Reply by mlb on January 13, 2015 at 1:42pm

David,

Just curious, are there any assets you would consider selling?  And if so what types and how do these differ from mineral assets?   ( And yes I get your premise, the ill informed seller will lose money just as an ill informed lessee potentially.) 

Permalink Reply by deutchen on January 11, 2015 at 10:11am
I think there many people who may make long careful considerations pro & con that may consider selling a portion. Many of these people aren't stupid or financially strapped to have considered doing so. There's many good reasons, many of which have been discussed here, for doing it or not doing it. I think many of the people who might like to entertain the idea of selling some are afraid to express their ideas here about why they might even consider doing so because of being of perceived as stupid or destitute.
Permalink Reply by Puzzled on January 11, 2015 at 11:52am

Is it supid to enter it a lease with an enhancement clause that turns a gross percentage lease into a defacto net lease?

is it stupid to sell minerals and payoff a motgage and save 100k in interest?

Or to sell minerals to buy some rental property to gain a non depleting income stream?

 Did you ever notice that everyone who wins to PowerBall lottery takes the up front lump sum payment even though they would get a lot more taking the prize over time?

Ihopefully all this discussion will help owners make good decisions.........

Permalink Reply by David Allen Lilly on January 11, 2015 at 1:59pm

You guys are killing it, what stake do you all have in folks giving their money away to wealthy interests ?

Refute this:

Someone will gladly give you 20 cents on the dollar today and take the other 80 cents down the road.

That is what you do when you sell your royalties, in essence you take the first 8 months or so of royalties and GIVE the rest away, for whatever reason, but it is still stupid to give your money away.

I think I know what I am talking about because none of you can refute my main contention.

Permalink Reply by Dan Warner on January 11, 2015 at 3:28pm

"I think I know what I am talking about ..."

A more correct statement has never been uttered.  

Permalink Reply by David Allen Lilly on January 11, 2015 at 11:30pm

Again, you have not refuted my claim, but hung on some part that of it that is not central to my point.

You do this because my contention IS correct.

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