Do you have a lease and have you looked at any deals to sell a percentage of your rights? I'm looking for advice, warnings, what to watch for, etc.!

Thanks! Christiane

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RE: "He isn't leased yet"

That is an important distinction.

Not leased, he would be selling 100% of the mineral rights.

If he were under lease, he would be selling only his royalty rights (12 1/2%, 15% or perhaps 20% ... depending upon the particular lease); as the holder of the lease currently holds the majority of the mineral rights (by virtue of the lease).

 

All IMHO,

                  JS

 

 

Jack Straw,

You are misinformed here.  What is conveyed in a mineral sale is not affected by whether or not the interest is leased.  Even if the property is leased, the owner CAN convey 100% interest (or whatever % is proposed) in the mineral rights to a buyer.  If the interest is subject to an O&G lease, it just means that the buyer becomes the new lessor and would be paid the proceeds of production at the royalty percentage in the O&G lease.  However, if production were to cease or production is not established during the term of the lease and the lease terminates, the buyer now has the ability to lease those mineral rights again in the future.  Additionally, the lessee (holder of the lease) does NOT own any interest in the minerals.  A lease does NOT convey ownership.  The lease entitles the Lessee to the production of the minerals minus the royalty percentage set out in the lease.  The sale of royalty interest is another method of hedging.  An owner can convey a royalty interest to a third party (for consideration today) without actually selling the mineral rights.  For instance, if you sold Joe Blow 1/2 or whatever % is negotiated, of the royalty interest in any current or future O&G lease, then he would be entitled to 1/2 of the royalties paid whether the royalty is 3/16, 1/5, 1/4.  However, royalty interest typically DOESN'T come with executive rights unless specified in the conveyance.  Therefore, the owner of a royalty interest does not have the power to lease the mineral rights or share in the proceeds of the lease bonus payment.  For those of you considering offers to sell all or a portion of your mineral rights, I hope this clears up some of your questions.

Josie,

There are many outfits out there right now looking to buy minerals and royalty interests.  Most seem to be focused on the high liquids content areas of the country.  Noble Royalties, MAP and Phillips Energy Partners are some of the reputable companies that I know of.  

Christiane,

Just curious if that offer still stands since the news article pertaining to the Ohio Oil Window problems? Have you had any contact with them since? Thanks.

Glenn

Christiane,

Lots of questions: Will they accept only 50% - if your land would be in a drilling unit then you would only collect royalties on half of your property.  Up front lease money is good, but they say the real money will be in the royalties collected each month. They may need your 50% to get to the 640 acres required for a unit...or you are in the middle of a unit and they need your land.  If you only lease 50% you will only collect the royalty payments for half of your land....be careful what you sign - see if the company has taken any permits out in your county/area near your property.  If you live in PA you can get the maps easy enough. 

 

Do the addition...take your acreage X 100.00/acre X 240 payments...then multiply by 1000.00 per acre X 360 payments....this will give you the span of your royalties since most wells last 20 to 30 years.  If you are currently in a drilling unit....why would you sell 50% of your money?  Yes, it is a gamble...but the company wouldn't be drilling a well near you if they weren't 100% sure of getting $$$$$$...it costs the company millions to drill...

you've lived this long without the money...be patient...life will be good!

Exactly, if it wasn't worth anything, they wouldn't offer you a nice amount to buy your mineral rights.

Thanks for the advice Fang. That is what I suspect.

Matthew,

CHK made you an offer since they control the drilling.  If you sell, they will drill more wells in the unit.  This could mean as much as 8 times more money per acre in the unit.  Sweet deal they have going!  If you don't sell they will take their time in drilling more wells in your unit. 

Jim

Very strange! (Edited to add: I thought I was replying to Matthew!)

.

Do you mean $1550 per month?

We have received letters from people looking to buy our mineral rights here in PA.  In fact, the last one was an actual packet with all of the legal paperwork enclosed, just sign your rights away and they will send you a check.  I called my family warning them about these (especially my parents) because it's easy to see the amount and think "Wow, instant money".  Honestly, do the math (at least we did) and we will make the money offered time and time again over the next few years.

Just my opinion. 

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