Anyone interested in 100 ac. with royalties.

 

I have 350 ac. in Guernsey co.  i would like to sell 100 ac. of it.  it is in an oxford lease with 2 + years remaining, no well yet.  I will be advertising it soon, thought i would start here.

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Permalink Reply by Chartist on February 8, 2012 at 11:04am

Well, the number you're looking for is likely to exclude all but an E&P company......But this goes to a point I was talking about when a co-worker got a land/royalty buyout offer of $14K per acre;  people cant or don't want to wait for the money....Someone is going to do a present value model to base an offer....My warning to you is watch the discount rate they build into the assumptions.

Permalink Reply by Rob Rotz on February 8, 2012 at 11:20am
I hear you jim. I'm not in a hurry. I know a few guys in the industry and they speak the same way you do. I just want to sell part of what I have and sit on the rest. Some one will pay the correct value. Thanks for the reply.
Permalink Reply by Chartist on February 8, 2012 at 11:37am

The cost of capital should not exceed 5% for a top quality E&P company.....So if someone shows you an offer using the present value model with a 10% discount rate, run away as fast as you can....The discount rate is one of the most important factors in the PV model for valuing cash flows...

Permalink Reply by rick knotts on February 8, 2012 at 11:29am

maybe but looking for info in portage co a group for gas leasing did good in wva i got land there and up here rick     knottsrick38@gail.com

Permalink Reply by Jim Litwinowicz on February 8, 2012 at 3:51pm

There are investor groups that will purchase your land with mineral rights at a fair price. Some are small independents, others are major wall Street firms.

Is this 100 acres already subdivided on a separate parcel? Any encumbrances on the property other than the lease? How accessible is it? Is the rest of your property leased? Are surrounding properties leased?

Permalink Reply by Rob Rotz on February 9, 2012 at 2:32am

Jim,  it is part of a 183 ac tract,  i will divide it if i make a deal.  it is free and clear other than the oxford lease.  there will be frontage on rt 265 in quaker and also on Barker Rd.   there are about 600ac that all touch that are leased.

Permalink Reply by Finnbear on February 9, 2012 at 3:08am

What are the terms Oxford holds it under?

What unitization size is specified?

What does the lease cover, specific formations or to the center of the earth?

Is there a Pugh clause and how well written is it?

Is it held by the primary term or HBP?

If primary term, when does it end, is there a renewal clause, and, if so, for how long does it extend the primary term?

What does the lease define as activity than can HBP the lease?

Does it (the lease) include a spud fee/siting fee that covers the true value of the land lost to a permanent well pad for a Utica multiple well drilling site?

What royalty%?.

Gross or net?

Who holds the leases on the surrounding properties?

These are just a few of the issues that would have to be studied very closely before one could even begin to determine a value.

Permalink Reply by Philip Brutz on February 17, 2012 at 9:28am

Would you happen to know who is holding the gas leases for the old Seaway Coal strip mine land that is now owned by Capstone holdings?  The land is located between RT 265, Greenlawn Rd, Co Rd 47, Wine Rd and Twp Hwy 949.

Permalink Reply by Rob Rotz on February 17, 2012 at 9:52am

i do not, but my guess would be Oxford or Brunner land.

Permalink Reply by Farmhouse on February 8, 2012 at 5:28pm

Keith Mauck-

This is a Great subject! Any chance of moving it into to a dedicated Group. I could see this being invaluable to those who are interested in either buying or selling. 

Permalink Reply by Billy Park Whyde on February 8, 2012 at 6:24pm

Personally I would not touch it with a 10' pole without seeing the lease. 

1. All oxford has to do is sink a Clinton well to hold it if all  the oil and gas in the lease.

2. Is it part of the 350 acres I would assume  the whole 350 acres would be under the same lease.

3. Oxford could easily drill a Clinton then flip the lower formations to another company you get no bonus money and posssibly only 12.5% royalty.

4. If it's reclaimed land did the coal companies release the coal rights?

Just a few possible pit falls that are possible without seeing the lease.

 

Permalink Reply by Jim Litwinowicz on February 9, 2012 at 3:04am

Certainly anyone would want to see the terms of the lease first. And if it has a 12.5% royalty, which is most likely, that would hurt the value. But it is still possible to find a buyer.

Has Oxford been drilling in the area? How active are they? I see they are from Zanesville but I didn't see a website for them.

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