Replies to This Discussion

Permalink Reply by Puzzled on January 9, 2015 at 8:32pm

Also because they would want to hold as much land b6 production as possible they may drill one well in a section then move with the intent of coming back later to finish drilling...assuming they intend to get maximum spacing ....a person could wait a long long time before their land was used to see the total payout from Eds post........maybe by then the income tax rates will be like they were under Eisenhower. ....much higher....

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Permalink Reply by Dan Warner on January 10, 2015 at 4:14am

Nope.  He's right; you're wrong.

I am a true stickler for accuracy in speech.

Having said that, no one is here for a grammar lesson.

Go Tide!

Permalink Reply by Dexter Green on January 10, 2015 at 5:54am

"I truly enjoy watching those in the mineral buying business (and newly laid-off landmen) come crawling out of the woodwork to argue not about the EUR of 16.6 bcf per 7000 ft lateral, but over how long before its extracted, decline curves, $/mcf, 400' to 1000' well spacing, discount rates and NPV."

EUR isn't real.  It's an estimate.  It could be higher or lower.  So when discussing something as complex as this it helps to cover everything, including all of those things that you mentioned and pretend are unimportant.  Wellhead price matters to landowners.  Discount rates matter to landowners, whether you agree or not.  Decline curves matter to landowners.  I mistrust anyone who says with absolute certainty what is right or wrong for someone else.  There's no one size fits all answer here.  To deny some parts of the conversation is to stifle a real debate.  

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Permalink Reply by 046aqwyftq0so on January 10, 2015 at 6:01am

I don't see why Landmen would be arguing over EUR. Personally the hundreds of landmen I know all have jobs as wel. But like I was saying, not one well is the same. Also, not one well in the entire 11,000 shale wells drilled in the US has reached the end of the decline curve. If decline curves matter to landowners how come none of them use them? Decline curves matter to WI partners for the most part. Landowners don't have to continuously put up money to maintain their production. WI owners do.

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Permalink Reply by Dexter Green on January 10, 2015 at 1:42pm

It matters when you're calculating the value of a sale vs. holding an asset through its production cycle.  It also matters to those who are using financial planners or other professionals to help them manage the income from a well or wells.  It isn't life and death, but it matters in both an academic sense and what I would call a 'real life consequence' sense.  It's another piece of the puzzle, that's all.  There seems to be no compelling interest for anyone to actively ignore it.

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Permalink Reply by Dan Warner on January 10, 2015 at 12:00pm

@ Ed

That was just a dig.

I wouldn't know the Crimson Tide from a box of Tide.

I had to look up who Nick Saban was.

I'm such a troll.

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Permalink Reply by David Allen Lilly on January 11, 2015 at 3:32am

Folks, I would never, ever consider selling my mineral rights to anyone for any reason, period. These are wealthy investors who are basically giving you less than one year of your royalties up front and then keeping the remaining for themselves.

I can think of millions of better ways to give your mineral royalties away, inheritance, trusts, charities, anything other than giving your money to wealthy people who only crave more wealth as they act like your friend while trying to get their hands on your money.

I laugh every time I throw another mailer in the trash from these folks.

No hard feelings either way, it's your money, and I understand folks wanting to make investments to make themselves more money.

I just would absolutely never even consider it at any price because whatever they are giving you it is only a pittance of what it is worth.

------------------------------------------------

I wrote that some time ago on another thread of the same topic.

Short version, if someone offers to buy your minerals, especially your royalties, I guarantee you that they will only offer you maybe, MAYBE 15% to 20% of the total worth.

You absolutely will be giving your money away.

End of discussion.

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Permalink Reply by David Allen Lilly on October 16, 2015 at 10:35am

I own 30 acres in the country and 5 city lots genius.

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Permalink Reply by David Allen Lilly on October 16, 2015 at 11:29am

My acreage is in Millwood township, Guernsey county Ohio and Quaker City proper.

These are my last words to you, you are marked correctly as I have contended.

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Permalink Reply by Dan Warner on January 11, 2015 at 5:47am

Many financially savvy people have posted their iteration of what the future holds from the shale vs. cashing out.  While valid in their premise, they are, at best, guesses.  Every number in every equation beyond today is, though it be an educated one, a guess.

I'm not an economist, nor an O&G man.  I can't argue with any of it.

What does come to mind when I read over-simplified posts purporting to have all the answers, are the people who would use the up-front money to pay down heavy interest bearing debts such as credit cards, mortgages, huge medical bills, student loans,  ...or someone who has an idea for a business, but may lack the credentials or the desire to go into debt to start it.

One philosophy being applied here by some is the inheritance factor.  ‘Do it for the children’ is a common refrain.  The same values were embraced during other ‘booms’.   Then the children had children, and they had children.  Now the heirs, who never knew the great-grandparents who genuinely cared for their future, are dealing with $40 checks to be divided between siblings after the tax bill has been deducted.  Meanwhile, their neighbors fly off to Hawaii because their ancestors didn’t lease their mineral rights.

We're talking about people and families that are as distinct as their fingerprints.  There is no one size fits all.  I have been dealing with family and gas reps over fractional interests of obscure properties that were unknown to us previously for 4 years.  Without itemizing, I'll just say that it has been an uncomfortable and unpleasant experience.

Worse, it has only begun.  This forum and others are awash with the stories of folks who are being cheated, and had to hire a lawyer (another deduction) to help them, often only to have the atty's work shot through by the O&G atty.  They've joined owner groups, often carrying a fee (cha-ching), later to have the protections they thought were in place challenged, if not blatantly ignored. 

Of course the buyers are investors.  So are the 'lessees'.  O&G is highly speculative.  Roller coaster prices, new laws, new technologies, and more lie in the future.  As forced pooling money seeks out the right representatives in government, we edge closer to losing control over when and to whom we lease our interests.

We are not all gamblers.

Now we have the glut.  The Law of Supply & Demand is pretty simple.  We can wait while the Arabs get tired of losing money, and the infrastructure (pick your adjective: takeaway, midstream, downstream) fleshes out, but newly created end users (demand) will be dependent on the lower prices set by the glut (supply).  Shale gas will not have the luxury of the Arabs in closing the valves.  We will be all-in, and won't be able to afford it.  It may be the ‘Saudi Arabia’ of the gas world, but it's still in the US, with the same economic pressures of any other industry here.  My point here is that tomorrow’s prices are not determined by yesterday’s prices.

My mineral rights are for lease, but I won’t rule out selling.

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Permalink Reply by al raptoria on January 11, 2015 at 6:33am

Excellent commentary. My best to you as you face the upcoming decisions. We (129 acres combined) are surrounded - by Nettles Well, Parker Wells, Dutch Valley Well - and still non-leased....and we won't rule out partial sale.... and we won't give it away for beads and trinkets either.

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Permalink Reply by Dan Warner on January 11, 2015 at 6:46am

Thank you.

The only thing I would add, as others here have pointed out, is the daunting notion of being in a partnership with O&G, in the case of a partial sale.  Here in WV, a partial owner can force sale on the other owners.  While researching the title, I found that the company who forced partition on minerals that I was involved in had been buying shares for 5 years before the suit in preparation for this.  That was 2+ years ago, meaning that they were making preparations before anyone in my county (that I know of) knew about the gas that was here.

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