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Permalink Reply by lance on August 10, 2014 at 6:02am

I called gateway the other day and they seem only to be buying royalties if there is a producing well near by or you are part of a drilling unit. My 21 acres in Wills township is on the wrong side of I-70. (Shugarts is on the south side).  evidently where there are no well drilled yet so they didn't even call me back.... I was gonna see what the going rate for 3 to 5% of my 20%. That would have left me at least 15% maybe hold me over till I get in a unit and get drilled....

Permalink Reply by lance on July 30, 2014 at 8:09am

Hi Evan, My property borders the north side of I-70 just north of county home rd on fairground rd. I just talked to Gateway Royalties and they are not doing too much in Wills township depending on exactly where you are in Wills. I am still waiting on info to see if I am a desirable plot or not.... Thanks for input....

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Permalink Reply by John B Gustavson on August 5, 2014 at 6:53am

A comparable sale was identified as having taken place on 11 June 2013 in Section 22, Township 7, Range 8, northeastern part of Noble County. The details were: Steven M. Gant et al sold to LL&B Headwater 1, LP, Austin, TX, the Buyer being a mineral rights syndicator (buying mineral rights, re-packaging them, “putting pink ribbons on” and promoting to investors). The tax parcels in Marion Township were: 23-0021340, 23-0021308.001 and 23-0021310. There was a drilled 4-lateral well (shown drilled, but non-completed) within 2 miles of the acreage as of that date.

The consideration was $10,500 per acre of mineral rights as back-calculated from taxes paid in the amount of $11,725.56 for the 279.181-acre parcels. With taxes at $4.00 per $1,000 of value in the transaction the sale price must have been $2,931,390, or $10,500 per acre.

Further, the parcels are not Held-By-Production at a historic 12.5% royalty, but have been recently leased at a high bonus rate and a high royalty representative of the Utica shale play boom. Therefore, this Gant Sale, showing a $10,500/acre value, is comparable to a multiplier of 2.0, exactly “2” times the local lease bonus of $5,250/acre published for Noble County at that time. This relationship can (with care) be used as a “bridge” from Lease Bonus to Fair Market Value of comparable mineral rights. Note: Mineral rights consist of BOTH Executive Rights (right to sign leases and receive bonuses) and Non-participating Royalty Interests (right to receive royalties in case of production).

John B. Gustavson, Certified Minerals Appraiser

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Permalink Reply by Dexter Green on August 5, 2014 at 7:10am

John, while I appreciate your insight into the matter, I have a question: can a purchase from more than a year ago be relied upon for current pricing given the volatility of the mineral market?

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Permalink Reply by John B Gustavson on August 5, 2014 at 11:21am

No. More recent sales must be found and included. I agree with your comment about the volatility of the market. I just finished a study in Butler County, PA, where I found 11 mineral transactions over the last 18 months. I detected relatively small changes in $/acre with time (and I saw no trend, up or down).

There was correlation with operator rate of activities, so I had to examine closeness of a transacted mineral property to permitting, drilling and production and make sure that these factor are comparable to those of the Subject, which I appraise.

And then there are other factors, too, such as geology and market for gas and liquids. Regards, John  

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Permalink Reply by Dexter Green on August 5, 2014 at 4:10pm

Well your learned opinion is quite appreciated here.  Thank you for taking the time to share the results of your work.

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Permalink Reply by lance on August 6, 2014 at 1:30am

Thank You

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