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Permalink Reply by Money Bags on February 4, 2014 at 8:05am

I would think if someone is offering you a set price then it must be worth 4 times what they are offering

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Permalink Reply by Rich on February 4, 2014 at 8:45am

I guess it would depend on what it is exactly. For instance some farmers around here only got 10.00 per acre signing bonus. When at that rate it is clearly worth more than 4 times what they got.

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Permalink Reply by J. Kinney LandRights on February 4, 2014 at 9:51am

There's pros and cons for selling.  I can assure you, you will make more money in the long run.  But I once had a landowner tell me "why do people take the lump sum when they win the lottery even when the lottery is a 40 year guarantee when royalties are not?" That kind of opened my eyes.   Here's a breakdown that a buyer presented to a landowner I'm working with.

Leased for $4000/acre on a good lease with 18% royalty.  Technically he gave up 82% of the future profits for $4000/acre. Obviously he doesn't have his own oil and gas rig to produce his own rights but he felt $4000/acre on a lease was a GREAT deal.  He was offered $8,000/acre to sell his rights.  If you break it down on a per percentage point basis then his lease paid him $48.70 per percentage point he gave up.  If he sold at $8000/acre for his remaining 18% then he would get $444 per percentage point.  I can assure you the gas company isn't going to just leave oil and gas under his property and walk away so basically by leasing he gave away 82% of the profit that he will never see.  Looking at it that way definitely opened my eyes that lease prices are extremely low. 

  There's a million ways to look at things but I just thought I would share that.  

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