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 September 5, 2014 at 4:09am

$6,250 seems like a decent offer in Jefferson County.  $2,250 is an objectively bad offer, no question.

Permalink Reply by Jeffrey Beunier on December 31, 2014 at 12:41pm

Prices are all over the place right now, and many buyers are having to change previous offers as oil and gas came down so quickly. 

As an owner of minerals and buyer of minerals, royalties, non-operated interests, etc I can assure you that there are many variables.  Some of the most important include the terms of your lease and obviously location. 

Lease terms vary widely and Net vs Gross on the royalty is extremely important.  Also operator reputation, vicinity of off take options (pipelines, processing, etc).  More than happy to take a look at your area, the geology underlying it, and the lease and give you my 2 cents worth.  Private message me if you would like.

Permalink Reply by David Rontal on September 5, 2014 at 4:02am

We are seeing wide variations in mineral pricing.  If you are interested in knowing what your minerals might currently be worth, please feel free to private message me and I can let you know what I am seeing on the ground.

Permalink Reply by Robert Matthews on September 5, 2014 at 8:17am

I am in a unit waiting for the gathering line to be completed.  I think it would be in my best interest to be patient an see what the future of these wells bring.  I think it was a generic letter but thought i would share the information. 

Permalink Reply by Jeffrey Beunier on December 31, 2014 at 12:41pm

Prices are all over the place right now, and many buyers are having to change previous offers as oil and gas came down so quickly. 

As an owner of minerals and buyer of minerals, royalties, non-operated interests, etc I can assure you that there are many variables.  Some of the most important include the terms of your lease and obviously location. 

Lease terms vary widely and Net vs Gross on the royalty is extremely important.  Also operator reputation, vicinity of off take options (pipelines, processing, etc).  More than happy to take a look at your area, the geology underlying it, and the lease and give you my 2 cents worth.  Private message me if you would like.

Permalink Reply by Philip Brutz on December 31, 2014 at 1:21pm

This is a very bad time to sell your mineral rights.  Only do so if you have no other choice.

Permalink Reply by Puzzled on December 31, 2014 at 5:02pm

what do you base that on?

2016 scientists make a break through in graphene  technology batteries that revolutionize the electric car market and home heating.........oil and gas prices suffer hugely......royalties go down

2015 the soviet union collapses and a large percentage of exported oil goes away.........prices skyrocket      royalties are through the roof

anyone ever hear of the tulip boom in the twenties?

the internet bubble?

My point is that it is very hard to tell what will happen to the energy markets next year or next month................what a persons risk tolerance and financial needs are  must play  a large part in any decision regarding any held asset

did we all buy apple stock when it came out?

did we all sell our enron shares before they went belly up?

Permalink Reply by joe long on January 1, 2015 at 4:58am

i have leased my gas rights since i have owned them from 5.00-60.00 acre to diff. gas companies  so , i have made money off them for years not a ton but some . even if bottom drops out of gas boom . i could have a small company come in and lease them . and drill a gas well and i would get free gas for life . add that up selling your rights in my opinion would be crazy even if i never get anything my daughters may some day . even if its free gas for life on a small well . not fighting just my thoughts 

Permalink Reply by Jeffrey Beunier on January 1, 2015 at 3:42pm

Free gas for life? Or for the life of a well, which can be anywhere from a few years to maybe 20 years. 

Also there is a concept of diversification, you are electing to take the risk that your operator is horrible at drilling, or that the formation is faulted out under your property.  And what about the ability to take the cash you receive and invest it providing a legacy for your daughters to draw upon in the future. I see your perspective, and minerals are precious, but I offer the counter perspective above to maybe give you a different view that you could do much better than you give yourself credit for and provide more security to your family. 

Also, everyone is different, and some need money for any number of things now,  you may have been fortunate enough not to need the cash, but stretch your imagination and even if you didn't need the cash, think about the investments you could make with it and not be tied to a single commodity and to a single piece of land.  Think of the options between all or nothing, you could sell part of your minerals, still get free gas, and diversify your risk - as the saying goes, it's never wise to put all your eggs in one basket, some may even say its 'crazy'.

In any event Joe, I wish you a Happy New Years!

Permalink Reply by Dexter Green on January 1, 2015 at 6:30pm

A conventional well can put out house gas for 30+ years.  The benefit of having no gas bill for three decades is something that cannot be overstated.

Permalink Reply by joe long on January 3, 2015 at 2:00am

happy new year to you ! the gas wells around here have been in service since 1950's  and still putting out ? so , have you sold yours? or are you working with gas companies to sway sellers to sell  .    . i need money . i work for living and with rich and the government keep taking my money  (i will always need money)  lets see taxes ,gas food college insurance and so on bye  

Permalink Reply by Jeffrey Beunier on January 3, 2015 at 7:39pm

Conventional wells do trickle on for a while, but when you factor in all the new production, the high pressures, etc - I would be surprised that they will remain economical as the operators will have to add compression to keep them going - then again, anything to keep a lease HBP'd. 

As far as needing money - we all do, I remember back when I went to college it was like $12k/year - and I worked to put myself through - now it's like $12k/semester. 

I don't work for or with the 'gas companies', I've been on the buyside (capital provider/investor) and I've started an oil company, and I own and invest in oil and gas wells.  Recently I started a firm focusing on acquiring minerals, overrides, royalty interests and non-operated working interests in my former backyard (Appalachian Basin) and my current back yard (DJ Basin).  I've seen the ups and downs, and although I understand your position of coveting your minerals, I would also be cautious of having all your eggs in one basket and not looking at all your options. 

As far as free gas for 30 years - let's say $200/month in free gas, or $2400/year - which would be around $72,000 in total over 30 years - if you discount that back to present value at 3% (estimated inflation) - then its worth $47,000.  If you discount it at 8% then its $28,000 - in other words, if you could get an 8% return on investing the cash you received today, you would only need to get about $28000 to have the same value (and buy the gas) and still have $28,000 left at the end of 30 years.

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