Hello everyone. I am brand new to this forum and doing this kind of thing so please excuse me for any mistakes I make. My name is Jay Wick and I live in the Phoenix, Arizona area. I own some producing minerals in Garvin County Section 16 Township 3N, R3W and also Section 9 T3NR3W. This is about 102 mineral acres. Does anyone have an idea of what this may be worth. I just received a letter of intent to purchase these acres. I was told that if I own 1/8 royalty it will be less and if I owe 3/16 the offer will be greater. However, the LOI doesn't specify this only states 1/8 royalty. I also told the company I will not warrant any title in the deed. They said fine, but when reading the deed it has a warranty. I received these minerals from my mother. Any help and advice will be greatly appreciated.
During this down time, many offers to purchase are flying around. Companies are hoping to buy low and sell high and use the "perceived panic" time to their advantage. The acres in 16 are potentially more valuable than the ones in 9 due to some faulting. Many of the letters want to purchase "current production" which is valued by the royalty percent and expected decline of the wells, but what they really want is the "future" value of the property as more drilling may come into the area. If one is buying on current value, a common rule of thumb for vertical wells is the past four years of oil payments and the past seven years of gas payments. Horizontal wells are completely different due to their very steep decline curves. Your acres in 16 are probably worth more due to their proximity to horizontal drilling (and the offering company certainly knows something you don't). The acres in 9 may also be in eventual horizontal drilling, but it looks like their might be a fault that may or may not hamper the drilling. I have to admit that I am in the "don't sell your minerals" category, but every family has to do the best thing for them. Maybe don't sell all of them even if you have to sell some. Watch out for that warranty clause. They can make you pay attorney fees depending upon how it is worded and it can cost quite a bit.
Thank you for your well appreciated advice. I do have other minerals in Garvin and other counties which I am holding on to. But I am getting older as we all do1 I understand what you are saying. I have heard the offering company is quite active in this area. I don't know if I should print their name out or what the protocol ethically is so I won't say it in this reply. I never warrant any of my leases either. So, if they want a warranty on this deal there will be no deal. I did learn the wells are 80 acre spaced and there are a total of about 16 wells in the area. My royalty interest is very minimum but I believe the value is in the acreage not so much my interest in the well. If you have any further comments or advice I thank you.
just consider that 3/16th is 18.75% and 1/8th is 12/5% so any offer on 1/8th should be about %66 of what that same value should be on 3/16ths
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Good advice and thanks.