WAS 16K Now 10K PER MINERAL ACRE

I just talked to a mineral buyer who told me that the going rate per acre of the Utica is going down in value. It was going up, I thought. But I was weighing my options and called a couple prospective buyers to see what my royalties were worth. This one guy I talked to told me that a while back there were offers made of 16K per mineral acre, now he said the same acres are only bringing 10K. I was trying to find out what my 20% royalties were worth because I was considering selling 10% of my 20%. Until you are in a unit the price will be lower than when you not in a unit even though you are under a lease agreement.... Anyone else have feedback on this?

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Permalink Reply by Dexter Green on July 9, 2015 at 2:52pm

Henry Hub nat gas is priced below $2.75, which means Appalachian gas is between $.50 and $1.00 less.  So figure a well that does 2 BCF and 350,000 bbl of NGL works out to a little over $13,000/ac for LOR.  The explanation for price decrease is simple: commodities prices have collapsed and very few buyers are going to invest in this environment at higher, more speculative prices.

Permalink Reply by Nancy LeNau on July 9, 2015 at 4:19pm

Dexter, Thank you.....

Permalink Reply by searcherone on July 9, 2015 at 3:48pm

And it is also about location, location, location.    As Dexter states commodity price has dropped and buyers will be looking for the most desirable acreage.    More wells drilled in various counties give more data to make buying  decisions.

Permalink Reply by Jack Young on July 10, 2015 at 1:36am

Appalachian gas is now closer to $1.50 under NYMEX in many areas - check your April statements. Also remember that if you sell you get taxed at capital gains rates, while if you wait and collect your royalties you pay at the regular income tax rates. There's lots to think about when you compare the options.

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