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Permalink Reply by Michael Hagen on Sunday

It’s a moving target. Would be great to get more info though.

Hagenkei@yahoo.com

Keith

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Permalink Reply by David Cain yesterday

Paul,

I am from Ohio and don't know much about PA, but I'll give you my perspective for what it's worth.

Land Value - $500/acre seems low to me.  I have acreage in SE Ohio and I would be had pressed to find anything for that price.  If you worked with an experienced and reliable appraiser then that is a good start.  You may also want to check property values on the county auditor's website, they usually have land valuations that are in the ball park of the value of the land.  You could also check with your uncle's neighbors to see what the going rate for land is.

Mineral Rights/Royalties - You stated that your uncle's property is already in a unit operated by Repsol.  I've heard of the company but am not familiar with them.  Since the land is already in a unit and you are an heir to the estate you should be able to get hold of the monthly royalty statements and determine how much your uncle was getting in royalties per acre per month.  These Utica and Marcellus wells produce most of their oil and gas in the first year and then the numbers start dropping pretty significantly.  Here in Ohio in good sections of the Utica I have heard of people getting around $1,000 per acre per month for the first 6-10 months.  Then the numbers start declining sharply.  After 5-7 years the numbers kind of flat line out at a much lower rate.  The last time I worked with an appraiser/realtor on land was before the Utica/Marcellus boom and they didn't really know much about mineral rights.  But I would think that by now, your appraiser should be able to provide some additional information on the mineral rights/royalties valuation.  The $5,000 that you mentioned was a very common amount for landowners in Ohio to get when they signed a lease for their mineral rights.  If your uncle's property already has a well and is held by production your family wouldn't be able to sign another lease.  As far as selling the mineral rights I've heard that they are most valuable when the well is being planned/drilled.  Buyers are less willing to pay much for a well that is already producing since the wells do start declining so quickly. 

Trust - I can't answer this question.  Perhaps the attorney handling the estate could offer legal advice on this.

I hope this helps a little.  Let me reiterate that I am from Ohio and not PA and things are different between the two states.  So take everything I wrote with a grain of salt.  Do as much research as you can to make sure you aren't leaving anything on the table and that you and your family feel comfortable with the decisions you will be making.  

If it does turn out that the land is only worth the $500 per acre, let me know.  I would love to have a place to deer/turkey hunt in PA.

Good Luck,

Dave Cain

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Permalink Reply by paul cavaliere yesterday

We had the land 110 acres, appraised and it came in at $3300 an acre. The appraiser Said that's the value of the land/home etc. He said the price does not include any value for mineral rights because they have no value? The $500-5000 figure was given to us by another source that we should tack onto the $3300 for the listing price.
My uncle gets royalties 20% from a neighboring well ($100-400) a month but has no well on his property.
So to clarify my question, we are trying to determine if we can ad money to the listing price to compensate for mineral rights or do they have no value and we have to sell for just the land appraisal?

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Permalink Reply by David Cain yesterday

Paul,  These well units are very large - often more than 300 acres and can go up to 1,000.  Even though the well head is not on your uncle's property there are probably laterals running under the property that is draining the oil and gas, which is why your uncle's estate is receiving royalties.  If you include the mineral rights in the sale then the $100-$400 per month in royalties would go to the new owner.  So yes, the minerals have some value.  When you say that the royalties are $100-$400 per month - is that in total for all the acreage or is that per acre?  Someone would have to calculate the Net Present Value of these future $100-400 payments to come up with a value to add to the sale price.  The last question I have for you is all the 110 acres included in the unit that is getting paid?  If only half the acreage is in a unit and the other half have not yet been drilled then the mineral rights for the undrilled portion should have significant value.

Hope this helps

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Permalink Reply by paul cavaliere yesterday

My uncles original lease 12 years ago was with tailisment but now they are repsol? Originally they were going to put a well and pipelines on his property but later decided not to and put a pad on the farm behind his.

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