I am a mineral rights owner of small tracts in 18 counties in N Dakota. In Divide I believe i have a total of 707.44 Acres containing 3 tracts. My portion is small, but Gillund 1-32H Well from Continental is on that tract , For example, The first tract is 1/64 of 360 ac of the SW 1/4 and the NW 1/4 of section 33; and the NE 1/4 of the NE 1/4 of section 32 all in Township 161 North, Range 95 West .
My uncle had 1/64 of the 360 ac in this tract. Then, my Aunt inherited 40% of that and I inherited 1/6 of that and my decimal royalty interest is: 0.00000488.
If I want to sell this and other parcels or a total of all my mineral rights, how do I calculate value?
Additionally, my sister has an equal share in all these minerals across all 18counties and also is interested in selling. Together that would be 1/3 of the rights.
We've been seeing prices paid all over the board. As a rule of thumb, most companies have used the 5X lease bonus or 5X yearly income formula, but quite honestly, it varies so widely anymore it's almost impossible to predict what you might receive for your mineral interests. Look at your royalty checks. Are they high? With such a small interest, a high royalty check would be a good indicator that your lands are worth more than the "norm" (if there is such a thing these days).
I am a landman that represents mineral owners and if you'd like to send me the complete details ([email protected]), I'll do what I can to determine what actual market value is (or should be) for your interest. I've been fortunate enough in the past to be able to get mineral owners more than they were offered and at better terms.
Another note: The more acreage you put on the table, the better bargaining position you have. If you and your sister own 1/3rd of the mineral rights, you're in a much stronger bargaining position.
Finally, NEVER take the first offer, and you will almost always want to turn down the second as well. If you're not being contacted to sell your minerals, but that's what you want to do anyway, contact a landman or land brokerage like mine that represents mineral owners. Once you give him or her all the details, he or she will have a better idea of what true market value is for your mineral interests and will more than likely to be able to find you several buyers for them. If he or she is smart, he or she will get them bidding against each other!
Good luck. Let me know if there's anything I can do to help.
Tom Coalson
Hi Beverly,
Divide County area is just heating up and Township 161N Range 95 W is in a good production area. Continental Elveida 1-33H has produced Cum Oil: 96061 since 12/08. Not sure why you are considering selling mineral rights that will produce for the next 60 years (in-field drilling will 4x or 6x increase over the next 20 years). I recommend you never never sell mineral rights if you can avoid it.
Best Regards,
Thanks for your thoughts and information.
Hey, Don: I used to give the same advice--never sell--but ended up finding that there are a whole host of reasons people choose to sell their mineral rights: loss of main source of income, divorce, the mineral interest is too small to justify dealing with it any longer, the rights are part of a contested estate that must be sold due to conflicting interests of the heirs, the owners of the interest are getting on in years and want to take advantage of it value today...the list goes on and on. From what I've learned, when people are looking to sell their minerals, there's generally a pretty good reason behind it. I've learned not to question or comment, but have endeavored to give anyone I work with the best possible list of alternatives and to let them choose among them.
Just a thought.
Thanks
Tom Coalson
Hi Tom,
fair enough. I couldn't agree more that there are lots of reason folks might consider selling their mineral rights and agree it's up to them to choose based on full understanding of the alternatives. Mineral rights are an asset that will only grow in value over the next 10 years within the Bakken Formation. We are just starting to see the value and the amount of oil production from this area. From a recent Motley Fool article:
A typical Bakken well will continue to produce oil for the next 45 years. Over those 45 years the average Bakken well will produce around 665,000 barrels of oil. The economics are exceptional even for a producer like Kodiak and its elevated $10 million well costs. For example, if oil drops to $75 a barrel then the company would still enjoy an internal rate of return of 35% and a payout of just 30 months. 50,000 future wells
The industry has already drilled about 5,000 wells in the Bakken, which means that the play might only be 10% developed.
Based on all this - I still feel if you can at all retain your mineral rights you will be far far better off over the upcoming years. This play is just starting and will grow beyond the recent USGS estimate of 7.4 billion barrels of recoverable oil. I'd guess we will see that estimate double again in 5 years.
All the best,