Anyone been approached about selling mineral rights?

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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Permalink Reply by Christiane Marshall on April 8, 2013 at 7:43pm

Justmeinpa, Are you already receiving royalties?

Permalink Reply by Justmeinpa on April 9, 2013 at 4:11am

Yes we are.  I will be happy keeping my mineral rights

Permalink Reply by LERRET on April 12, 2013 at 7:54am

and we will make the money offered time and time again over the next few years.

One months income does not mean 3 yr down the road, you get that same amount...the income will decline on each well, sometimes radically...90% in the first year in some cases...

AND as the income decreases those pesky "post-production" expenses will dramatically increase, since many are fixed monthly costs. 

One simple metric is to estimate the first months' income and the 60th months income at zero.... so 30 x first month = total income.  $5,000 mo. 1?  = $150,000....

In the Fayetteville shale there were a lot of folks who turned down $7,000 an acre in 2008-9 and have yet to total income of $3500 per acre...

Having said that I am no fan of selling minerals as I see them to be multi-generational property that can benefit 4 or more generations. To sell means to pay taxes on it and that can take a terrible bite out of you....

Permalink Reply by Mike Sero on April 12, 2013 at 8:00am

Well if you sell you basically put 20-30% of that towards taxes.

Permalink Reply by Edward Haas on April 9, 2013 at 3:33am

YES , LARIO $1500. ACRE O&G LEASE AND YOU

Permalink Reply by kris miller on April 9, 2013 at 6:42am

its the equal to jg wentworth theyll give you a third of their projected profit wich after speculating it turns into around 18 percent. I know someone at mineral assets im planning to buy stock its gonna be a gold mine for em. i got offered 379,000 this month 479,000 alot would take it but i plan to be here in 15 years so ill take that 1 mill atleast over the 15.

Permalink Reply by dr j on April 9, 2013 at 5:22pm

http://www.bountyminerals.com/

This company appears to be buying lots of landowners rights in Columbiana County.  Every week there are multiple real estate transfers of mineral rights printed.   The prices seem to be all over the board but  there is no way to know what percentage they have purchased etc.   Interesting to watch. 

If you look on the county auditors site you can get an idea, for instance there is a 30 acre parcel of mineral rights "purchased" for 200K. That may be all or some percentage.  

Permalink Reply by Christiane Marshall on April 10, 2013 at 12:50pm

dr j, When someone sells their mineral rights, it's public record?

Permalink Reply by James T Monyak on April 10, 2013 at 12:57pm

Yes.  The records are kept at the county courthouse with the property deeds.  

Permalink Reply by Mike Sero on April 10, 2013 at 1:01pm

Depending on state etc... buyer will file papers that might show the actually value they paid - WV does require it - its been known that actually amount is not always reflected that is upon the buyer not the seller.

Some Deeds may have actual price - others not -

Permalink Reply by Mike Sero on April 11, 2013 at 8:54am

Many reasons -

Many buyers are speculators - some know what they are doing others not. Could work in your favor both ways -

sellers - you have a bad lease -

Ex: you have 500 aces multiple parcels one lease - Driller drills - puts 5 acres in a unit or less - all your minerals are now HBP - it will take you a long time to get your lottery ticket in scenario like this one -

I could go on and on

Permalink Reply by brat on April 11, 2013 at 9:16am

Or, sale is taxed as cap gains , lease as ordinary income.

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