I am considering a lucrative-to-me offer of roughly $4770 per net mineral acre in Leon County, TX, Abstract 267, currently non-producing but with a Surprise Valley lease taken out in 2021. I own 8 acres total in a 160 acre tract. This amount is a good ten times anything I have seen in previous offers over the years, and I know it’s a “hot” area right now. It is a good time in my life to let the mineral interests go, but am interested in hearing back from anyone who might have some knowledge of this area and can comment. The royalty company and land man are legit.
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Cindy52
We are not experts in any way on this subject but we are also being approached regarding the sale of mineral rights in Leon County, TX. We have had phone calls with $ per acre examples, and several letters expressing a desire to work out a deal. The hard part here is determining how this really works. We are researching to understand all of this and have learned that a value offered in one area most likely won’t be the same as a neighbor may be offered due to a variety of reasons. We have discovered that in selling mineral rights an owner should be dealing with net royalty acres which is different than net mineral acreage, combined with the current lease you hold stating the % of royalty which will figure into this as well as producing or not producing. There are several sites online that offer formulas that may get you closer to what you are trying to understand. One site I am reviewing is: oilandgaslawyerblogcom which has information that may help you in your decision. Once again I am not affiliated with any oil profession or other site but am, like you seeking knowledge in this subject. Hopefully other subscribers will reply and I wish you well in whatever you decide.
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Here’s an example of potential royalty income from these Lower Bossier wells that Comstock is drilling in Robertson and Leon Counties (Surprise Valley is leasing for Comstock).
Comstock’s first well in this new play is the Circle M Allocation 1H in Robertson County. It’s been producing for 290 days now (10 months). It has produced 7,139,561 MCF of gas during this time period. Assuming gas is worth $2.50/MCF, that equals $17,848,903 of revenue. Assuming a 20% royalty, this production has produced royalties of $3,569,781.
The Circle M unit is 1146.79 acres. If your 8 net acres were included in this unit, your royalty income during the first 10 months would equal $3,569,781 x (8/1146.79), which is $24,902.
The offer of $4,770 per NMA equals $38,160 for your net acres. In this example, your royalties would equal 65% of the purchase offer within the first 10 months.
Of course there are a lot of uncertainties involved in evaluating this offer. The biggest risk is that there may never be a well drilled that involves your acreage. In addition, even if a well is drilled, the timetable is unknown. However, if a well is drilled, it is likely to produce for many years, and it is quite possible that gas prices will increase as well.
Good luck with your decision!
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Thanks Alan, for this thorough walk-through of what I might consider… if only we had the crystal ball!
I’ve been approached by MANY companies over the past year (more than ever in 45 years of owning these minerals), so it’s obvious that these minerals in these counties - I own minerals in all the counties mentioned - are extremely valuable. Keep in mind these offers are only the tip of the iceberg of what they are actually worth, so if you do want to sell, get these companies bidding against each other for the absolute best price you can get. I’m not selling because of the upside of future leasing bonuses and production for my family. Good luck!
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We have received many offers also and have asked them to email me the offer. They have increased their offer many times and more than 4470.00.
I own interest in the Comstock-Circle M in Robertson County. I would be interested in buying your 5% net royalty if you’re selling.
Paul M
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Get an amount of the cashiers check and documents they want you to sign. Many times people get offers to lease or purchase for their interest in a 100 acre tract. Then they find out they they only owned 10 net mineral acres in the tract as an example. The final amount and what the documents really are turn out to be very different!
Are these lease or sales deals? I have also been offered in Leon County by Surprise Valley. They are only offering a lease deal of $550 an acre and 20% royalty.
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Counter offer them - they usually low ball it a bit and they really want to lease up as much as they can so I feel there is room to negotiate.
$550 is a long ways away from the $5,000 mentioned above. i realize there is room to negotiate, but not that much. I was just wondering what people were seeing in lease deals.
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I think we are talking apples and oranges here - One is a purchase price; the other is a lease bonus offer.
Okay, that’s what I was asking. Any clue what a good lease price is?
I don’t want to divulge too much info here but suffice it to say that if you hold out, it can be higher than $500 . . .they seem very anxious to lease so try to go higher.
Suprise Valley (the Broker for Comstock) is having a lot of problems with their landmen and internal staff. Landmen do not have the final say. So don’t take their bluff. The amount of net mineral acres and the location makes all the difference. Get their offer and the lease they propose in WRITING. Then talk about price and all the other details. AS in real estate, location, location, location!.
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Again, I am just looking for a range here of leases in the area. Why would you not want to “divulge too much here?”
Actually, because it is proprietary information when you negotiate - let’s say $500-700/net mineral acre
Nothing is proprietary unless they require you to sign a confidentiality agreement.
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I would never sign a confidentiality agreement on anything to do with oil and gas leasing. This might prevent you from getting legal advise or competitive offers.
Alan, I viewed the map you sent showing the abstracts leased by Comstock/Happy Valley. I wanted to obtain that same information in Leon County depicting the abstrcts in Leon County leased by Vanna Production and Thorp Petroleum.
Can you please tell me your query method to obtain this information?
Thank you.