Antero offering to buy mineral rights

Has anyone received correspondence from Antero about the company wanting to buy your mineral rights?

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Permalink Reply by shesrushmore on November 7, 2018 at 2:47am

What kind of price do you have in mind? Highest I have seen was for unleased rights at $8000 in wv

Permalink Reply by L. Gilmore on November 8, 2018 at 5:48am
Yes, just don't know when they will start to drill. There is a well head less than a 1/2 mile from our property.
Permalink Reply by Roger May on November 12, 2018 at 6:57am
You will only be taxed once, (long term capital gains taxes). Once you sell your mineral rights, you no longer have any tax liability in relation to them.
Permalink Reply by Roger May on November 12, 2018 at 7:04am
Its not necessarily true that you will get that much money back in the first year of production. $7200 per net mineral acre is a fair price, as far as I have seen. There are some royalty calculators available online where you plug in some assumptions and it shows your total royalty payments over the first 5-8 years. Price of natural gas, net minerals/total pooled acreage, # of wells per the total pooled tracts. My ballpark guess at the going rate for Tyler county would be between $7600 and $9900 per net mineral acre under an 18% lease. But there is plenty of fine print you need to look at in the actual lease.
Permalink Reply by Roger May on November 12, 2018 at 7:26am
So lets make some assumptions. You have 40 net mineral acres. Chances are that with Antero around, they would drill approximately 12,000 foot laterals. They would need to pool your 40 acres with at least another 1280 acres so that they could drill (lets say 4 wells in that pool). You would end up with 40/1280's of the pool or just over 3% of the total royalty pool . Its actually 3.125%. Assume again that they drill 4 wells in that pool and each has a net present value of $20million. $20mill x 4= $80million. 18% of $80 million is $14.4 million. But you have to share that value with the other mineral owners in the pool. 3.125% of $14.4 million is $450,000. You would get that money over an 8 year period and pay regular income taxes on that amount of money (lets use 30% fed tax rate). Net to you over 8 years is $315,000 net AFTER TAX dollars.

Compare that to a sale with a 20% maximum long term capital gains rate. they are offering $7200 per acre x 40 acres= $288,000 now. AFTER TAX of 20% leaves you with $230,000 No risk. Prices may go up, they may go down. They may not even drill it. for 10 years. Present Discounted Value of $315,000 over 8 years is way less than $230,000 now even assuming a Discount Rate of 5% per year. At a 5% rate of return on your aftertax dollars, you would end up with $339k if you sold and invested the proceeds for 8 years and got an average of 5% per year on your investment.

Now mind you there are ALOT of assumptions above, mainly the size of the pool, the value of the wells etc. But you can see that the $7200 isnt too low of a number. My bet is your could get north of $8000 per net mineral acre which would start you out with $320,000 gross proceeds.

Good luck
Permalink Reply by L. Gilmore on November 12, 2018 at 7:53am
Thanks for this information. We've had a couple of other companies contact us too. Pikewood out of Morgantown and Alpine Energy I believe out of Pittsburgh. Antero said that $7200 is their highest offer. We live in NC so kind of out of the loop.
Permalink Reply by shesrushmore on November 19, 2018 at 4:37pm

Have you tried any other companies or just gonna hold?

Permalink Reply by Barbara McIntyre Ray on November 12, 2018 at 9:24am
Yes, I own 6 acres in a 36 acre plot, in Tyler County.
Antero offered $2,000 bonus and 18 % on royalties. I have not closed
Permalink Reply by Barbara McIntyre Ray on November 21, 2018 at 7:39am

Mistake.

Permalink Reply by Barbara McIntyre Ray on November 12, 2018 at 9:24am
Yes, I own 6 acres in a 36 acre plot, in Tyler County.
Antero offered $2,000 bonus and 18 % on royalties. I have not closed
Permalink Reply by Roger May on November 12, 2018 at 9:28am
I dont think I'm supposed to promote anyone or anything on this thread, but you might want to reach out to me may.roger@yahoo.com
Permalink Reply by William Dotson on November 12, 2018 at 12:10pm

Once you put the minerals in your name, Tyler Co. will tax the property. They use a minimum value of $200 and at that valuation you would pay $4.74/yr. Then you are taxed on production by the county as well. Basically, they use the production to put a value on the completed well, so the better the well the more the tax. If so so, figure figure @ $100-150/yr tax and if it is a good producer then $250-300/yr. They Do NOT tax the bonus money for just leasing the property. Although, you would have to declare that for income taxes. Point is the property taxes are very reasonable for producing wells and down right ridiculous low for just owning the minerals without a producing well.
We have several horizontals and over the first four years of production we averaged $137.93/mo./net ac. in unit/well
The avg lease rate was a little over 13% on 15 wells.

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