Approached to sell royalties

New to this site. Has Anyone sold their royalties? If so how much did you receive. We have been approached by a company wanting to purchase some of our interest . We own property in western guernsey and western noble counties. We are strongly considering selling a portion. Any input would be appreciated.

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Permalink Reply by hopeforoil on July 6, 2012 at 8:36am
I think we can just agree that you are incorrect. Do yourself a favor and google EUR (estimated ultimate recovery) and aslo shale well decline curves. Once you research that a bit you will see how FAR off the mark you are with your numbers.
3rdk2fq1zz77dPermalink Reply by 3rdk2fq1zz77d on July 6, 2012 at 8:47am

Marcus isn't overstating the reality of shale drilling economics.  There are a handful of companies that do pretty well, another handful that are doing little more than treading water and keeping their heads above it, and there are a butt load of companies that are losing their arses... or more appropriately, losing their equity and shareholders value.  I won't go so far as to say that landowners, as a whole, get the best deal but Marcus is correct in saying that they have ZERO invested in the drilling process.  Sure, working a family farm or dairy is excruciatingly difficult with minimal financial rewards... but the oil and gas companies are not responsible for putting people on their family farms, nor are they responsible for keeping them there.  Oil and gas companies do end up leasing (and handing out bonuses) on millions of acres that turn out to be non-prospective.  That's not the landowners fault, its not the oil companies fault... it just is what it is.  Landowners get paid for literally nothing when their acreage turns out to be incapable of producing hydrocarbons.  By the same token landowners that happen to fall in the "sweet spot" get paid more or less the same bonus amounts as the landowners that own goat pasture.  They do, however, reap the benefits of receiving royalties over a number of years. 

Wells are like people... from the minute they are born they begin dying, some more quickly than others.  Wells don't suddenly start declining in year 2, 3, 4, 5 etc... they will fall off and begin to establish a decline curve within months. 

Permalink Reply by MKMC on July 6, 2012 at 9:14am

Hopeforoil

I was just trying to help with your decision and answer your question.   I do not believe I am incorrect but you obviously know the future better than I.    But what I can't understand is why you ever asked the question?   I guess the next time you ask you may want to leave out the part where you say "ANY INPUT WOULD BE APPRECIATED"

Permalink Reply by hopeforoil on July 6, 2012 at 9:33am
I do appreciate the input. This has been a very constructive discussion. But when someone is posting grossly incorrect figures that cannot be backed up by facts it should be pointed out. This forum is here to help educate so we can make educated decisions. Posting numbers and making statements that are so far off the facts(ie ...horizontal well drop off usually is about the 7th or 8th year...) only causes confusion for those looking for help to make difficult decisions.
0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on July 6, 2012 at 4:30pm

"I do not believe I am incorrect ..."

And yo have every right to think that, but it isn't reality.  This is not a personal attack on you or anyone else who is unreasonably optimistic.  The fact is that the EUR numbers that are presented for shale plays are grossly misleading and border on flat out lies.  The decline curve is steep and if a well hasn't paid for itself after ~two years it will usually be unprofitable.  Range's presentation states that 80% of recoverable hydrocarbons in the rich, wet part of the play come out in the first two years.  

Permalink Reply by MKMC on July 7, 2012 at 2:36am

I am not posting incorrect figures if you would do some fact finding with the oil and gas companies in your area you will see I am correct and that my figures are no where near grossly miscalculated.     You want guaranties on oil and gas production in your state and their are no guaranties on anything in life but the fact still remains that if someone in the area is wanting to buy your royalties after you have leased your property their are not doing it out of the kindness of their heart.     You are rite there is drop off after a couple of months and years but the wells that I have seen in this area are pumping out at a rate of 600,000 cubic feet per day on a 320 acre unit to 9.5 million cubic feet per day on a 1280 acre unit.     I have seen these wells with my own eyes and have talked with the people drilling in the area and they all say the same thing on a horizontal well expect it to produce for the next 25 to 60 years and when the pressure gets to a certain point they will re-fracture and get the pressure back up.    I have spoken with Land Owners in these same areas and their royalties on a horizontal well are very good and have been for a couple of years there is a drop off from start to a couple of years later but we are talking a drop from millions of cubic feet per day to a little less millions per day.    I would strongly suggest before selling your interest that you go and take a drive to Tioga, PA. and ask the Land Owners in that area about a horizontal well and after speaking with them see if you want to sell your royalties because I will guarantee you they would not even consider it.    The people trying to buy your interest are giving my profession a bad name and when it falls apart after selling I am the one they call to see if anything can be done to reverse it.     The saying is true that( all good things come to those who wait) Natural gas is in its infancy stage like oil was 100 years ago do you think the people in those areas of the United States are glad they or their parents sold their interest in the oil today.     The sweet spots you are talking about are all over the United States but just like with oil if a company does not do their research it is the difference between a 600,000 cubic feet per day and 9.5 million cubic feet per day.  With all the big oil companies in the world drilling in your area and all over Pa. do you really think they just don't know what they are doing and are gambling with all of their and their stockholders money.   I do not know what your agenda for this Thread is but I think I do and I will post the numbers that I know are correct for all the Land owners in the area to see if they seem to much for you to handle then like I said earlier take a drive and see for yourself.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on July 7, 2012 at 6:38am

"I am not posting incorrect figures..."

"You should hold on to your minerals statistics say that for every acre of ground that you own the minerals on you can expect 1,000,000.00 per acre (emphasis mine) over the lifetime of the well or wells."

Those are incorrect figures.  You are a liar and a lousy mathematician.

2s72s0k9mm8gdPermalink Reply by 2s72s0k9mm8gd on July 7, 2012 at 8:17am

Unless I had one foot in the grave and the other on a banana peel , and not a single heir to be considerate of  , Then , maybe , I would sell for the instant gratification. Honestly , I would find a good charity or a deserving family to bequeath my royalties to rather than make some rich dudes richer! Seriously , money must have a much stronger scent than blood , judging from all the dorsal fins showing up..........!

Never ceases to amaze me just how many absolute experts there are on a subject that is so much in it's infancy and how sensitive the "experts" get when , God forbid , someone else comes along with a different set of figures.

I mean , seriously , who the heck REALLY knows the potential royalty , given the multiple plays some of us (alot of us) reside above......????? Technology is constantly evolving and techniques improving all the time. Even with the latest technology being used NOW , just a very small percentage of the resource is considered recoverable. Who is foolish enough to think these numbers won't be greatly improved upon as we move forward?

Keep an open mind. I kinda like the idea of 1,000,000/acre........Has a nice ring to it!

"Facts" are changing daily. Let's see what tomorrow brings.

Permalink Reply by Bluflame on July 8, 2012 at 6:11am

Glenn,

  For what it's worth (fwiw), I agree with you. Today's reality is tomorrow's history. Currently, roughly 10% of the resources are recoverable per HZ well. I'd bet that the O&G companies' and fracking companies'  research people are burning the midnight oil devising methods to improve that number. After all, a small recovery % improvement will greatly increase returns on a $6MM horizontal well.

  Now, $1mm an acre royalties???.....seems far-fetched. But it does have a nice ring!!! Who'd of guessed a few short years ago we'd even be discussing something like this?

BluFlame

2s72s0k9mm8gdPermalink Reply by 2s72s0k9mm8gd on July 8, 2012 at 6:28am

Bluflame,

It's like a dream I keep waiting to be woke up from. Life is good and we all need to be a tad more appreciative of what we have been given I think.

The fact that investors are seeking to purchase our mineral rights speaks volumes IMHO.

Is it just me or have alot of these discussions taken the low road lately as far as rudeness and blatant meanness by some of the posters? I have only been on here less than a year now , but have witnessed a sharp decline in the quality of discussions lately. Sad.

Glenn  

Permalink Reply by Linda A on July 8, 2012 at 6:34am

ditto glenn... and have not been on here for a year... :(

Thoughts and advice are for informational purposes only - EVERY situation and person is different but each comment allows us to think, and yes, to even dream.

Insults everywhere appear to be the norm, not just this site...

It goes to character and to the way we were raised, and yes, the green eyed monster has taken over some usually very good, level headed people.

Hang on for the ride or don't complain about not getting your 'fair share'... Ugg, hate those two words...

2s72s0k9mm8gdPermalink Reply by 2s72s0k9mm8gd on July 8, 2012 at 6:41am

Thanks Linda.

I was hoping it wasn't my imagination! LOL!

We will hang in there and enjoy the ride!

Glenn

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