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 Dexter Green on January 20, 2015 at 4:16pm

That's not a bad offer when you consider the data sets available.  I ran the numbers on property there where Rex had several wells in production.  Assuming favorable pricing the total royalties for the unit were ~$42,000/ac.  Someone offering you 50% of the value upfront is attractive.  

Permalink Reply by David Allen Lilly on January 21, 2015 at 1:16am

You will never be offered 50% of the expected payout from your lease.

You will be offered 10%, if you are lucky.

Not one single person has challenged that assertion as yet on this thread.

Permalink Reply by Finnbear on January 21, 2015 at 2:11am

Dexter Green - It doesn't read like the man in Millwood Twp was offered $20,000/acre. He asked for $20,000 and was turned down. Anyone in the business of investing in mineral interests would turn down a request like that or they would soon be broke and out of business.

Permalink Reply by David Allen Lilly on January 21, 2015 at 2:32am

Yes, he asked for $20,000 an acre to purchase his royalties and was turned down.

Eclipse is drilling all around him and he has a very favorable lease.

Permalink Reply by Dexter Green on January 21, 2015 at 4:28am

I see.  Apologies.  I misread the comment.  

Permalink Reply by Teresa Kline on January 19, 2015 at 7:28pm

To sell ones minerals? I guess we all have to look at what's  best for each of us. Our land has been in the family for over one hundred years. We grew up with "remember spring and fall taxes". Does anybody know what over a hundred years of taxes looks like? I do because we have everyone of them. That's surface and minerals.  We enjoyed the winters ice skating and summer cookouts, marching in the woods learning about all the different trees and snakes. Now with the Marcellus we stand a good chance of making some good money. We want a lease and drilled so the property can go down to the fourth and fifth generation.  But we have to contend with the crazy anti drillers, anti mining and now the "no ZONES" of a crappy little township. No we will not sell my sons have been told since they can remember do not sell Grandma and Grandpa's land because they worked so hard hold onto it....Last words to hell with opec

Permalink Reply by Werner Kostendt on January 20, 2015 at 7:04pm

I have also heard that a good "old timers rule of thumb in Texas" for the most probable selling price of minerals is 3x to 5x the bonus payments paid for leases (depending on lots of things including royalty percentage, infrastructure, nearby action, etc..) 

If bonuses of $3,000 per acre are being paid that would put the most probable purchase price of the minerals at $9,000 to $15,000 per acre.  

Does this rule of thumb make sense up here now?  It would not make sense when bonuses of $5 to $25 per acre were being paid, but in an active market bonuses logically would bear some relationship to what buyers thought the productivity of the acreage is likely to be?

Permalink Reply by David Allen Lilly on January 21, 2015 at 1:13am

Another rule of thumb is the investors will pay you about 10% of what they expect will be the total payout of the lease over the life of the well, or as I have learned lately over any production your lease stipulates, most likely surface to core.

If, or when, they find another formation that is more valuable than the Utica guess what you get out of that one ?

Nothing.

Permalink Reply by David Allen Lilly on January 20, 2015 at 12:26am

If you have no heirs why not sell the farm in Monroe county and keep the minerals, that should sufficiently fund your move and purchase of your next home, allowing you to be closer to your parents ?

Do you have any nieces or nephews you would be happy to have been a Blessing in their lives ?

What about St. Jude Childrens Hospital, The American Cancer Society or a minority/under privileged scholarship program ?

Your home and property alone are worth considerable value, even if you hold on to the minerals.

Permalink Reply by Annie Miller on January 20, 2015 at 11:28am
Ed, yes, I read that in the local newspaper; it is most ironic that Murray was more interested in the money offered now, before he equated the gas/oil development as direct competitors of the coal industry, stating that the gas development would take food out of the mouths of the poor coal miners as they would no longer be needed as his mines would have to shut down with the sudden glut of cleaner energy available.

Suddenly he is all OK with the shale gas industry, as long as his deep pockets get filled.

Guess he doesn't worry anymore about his coal miners starving due to losing their jobs.
Permalink Reply by Finnbear on January 21, 2015 at 2:03am

I was part of a landowners group a couple of years ago that leased a bunch of land affected by Murray's coal operations. These coal operations were going to be a huge obstacle to locating drilling sites UNTIL Murray found out how they could realize a revenue stream from the shale development. Suddenly that obstacle was removed...

Follow the money folks, it tells the story every time.

Permalink Reply by David Allen Lilly on January 20, 2015 at 12:06am

For months the letters we get offering to buy our minerals all merely state that they are "paying top dollar".

The last monetized offer stated $15,000 an acre, but that has been a good while.

I look at them out of curiosity but quickly discard them.

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