Moved up here to keep the conversation in one place
Jill Evarts Posted:
My interests are in Marshal County Sections 17 5S 6E and 8 T5S R6E , someone suggested I wander over here, since there is lot of good information, and our sections abutt. I received an offer to buy my my interests by Drake at Legacy. $12,500 for net acre for 17, and 8,500 for 8. Wasn't planning on selling, but numbers looking interesting. Tthere is a marginally producing well on each and they are digging new wells on each. As I said I am an out of state owner with no idea what's going on, and looking for a little direction.
Best,
Jill
Jill,
I didn’t dig through everything because of the time involved. Merit has permits open for 6 well in section 17-5S-6E. It looks like they reworked an existing well a couple of months ago and the test looks decent. At least one of the new permitted wells has been spud (drilling started).
There is also a new well on 8-5S-6E. It shows drilling started 11/29/2013. I don’t see a completion report yet, but I suspect it is producing now.
This is why I don’t like the way these companies make these offers. I feel it is pretty slimy to make an offer to you and not reveal there are new wells currently on the propertied they are trying to buy. And I feel (or used to) Legacy is one of the better ones.
Without serious evaluation it would be difficult to say if that is a fair price. I strongly suspect you will do better based on the production income over the next 2-3 years than this offer.
I’d ask them why they are interested in making such a high offer when it only brings in $XX.00 per month now. See if they disclose information they know. That will tell you if you even want to deal with them. Regardless, if you decide to sell there are better avenues that should bring more than what was offered. That is assuming you have clear marketable title.
Two companies in particular are pretty slimy about offers like this. Not stating names for potential legal reasons. They both offer $250 checks on the bottom of their cover letter. If you note carefully, they use exactly the same fonts on their letters and are out of Dallas and Fort Worth and are partners. If you sign with them, you have just clouded title on everything you own, given them Power of Attorney and signed mediation rights to them-basically, you just lost everything. One of the names is a very deadly snake-well chosen name…..
If you get a letter like this, it means they know that some big plans are in the making and they would like to buy you out for cheap based on a piddly well and they would most likely benefit from the new wells with the original owner never the wiser. I use the offers as an indicator of future activity and then use them to light my BBQ pit.
That said, there are legitimate companies out there that buy and sell minerals all the time. A general rule of thumb is paying four times last year's royalties for oil and seven times for gas. BUT, if new zones are about to open up or new wells are about to be drilled, then you will not get what the property is really worth. It all comes down to who is taking the risk. Be very careful if you own mineral rights in the new shale plays. They will buy shallow production and then go deep later. Be an informed owner. Sometimes, it is okay to sell, but get your value. Like Rick said, the first 2-3 years of production on the shale plays will be the best. Take your money then and sell later (if anyone wants it). The last twenty years of the shale production is pretty predictable and there will probably be offers, but they will be much lower because the production is lower. It will depending upon commodity prices then. The more we export gas, the better the gas prices will be.
LINDA RIGTRACKER's POST TO JILL:
Jill...What main cities/towns are in Marshall Co.? They've told us this SCOOP action goes south from around Piedmont (in Canadian Co. I believe) down through Grady, west edges of McClain and Garvin, NE Corner of Stephens, Catches a lot of Carter and goes on SE all the way to the Red River (I'm thinking that southmost part catches yours. Now they are talking about adding "the STACK play to the north of it and we keep hearing how they have kept it all on the Hush, Hush until the majors have either gotten it all leased or bought up as far as the minerals go. My cousin said down around Ardmore (he lives just north of there) that we would not believe the action that is going on around there. Yes we would! That's the way it was with us in the Sweet Spot of the SCOOP. We owned some of our minerals since we were in college in the early 1970's when we bought my husband's cousins minerals only because he needed the money at the time. Cost us $150. and although we had leased it out over these last years for enough to get our money back we wondered why through 2 or 3 oil field booms no one seemed interested in drilling down there. Turns out Continental said after the "cat was out of the bag" about the SCOOP that they have always known the good stuff was down there but at the price of oil, etc. has never been feasible until now to go that deep after it. Harald Hamm the owner of Continental has said that we have more oil than Saudi Arabia and enough to make the USA self sufficience as far as energy goes. Now they are very aggressive to make that happen. I'd say if you are getting offers like that to purchase they definitely know something is going to happen. Continental and Newfield leased our royalty for only $650. and 3/16 because we didn't know any of this was going to break loose. Now people are getting offers like that and getting as much as 1/5 interest. Before all this started we would have sold out if anyone had offered us $500. an acre and now we have been offered as much as $13,500. an acre but we are not interested in selling. Glad we didn't sell back then we'd have been kicking ourselves. However, I'm not saying "don't sell" because I can't know your situation I'm only wanting you to be informed no matter what you do. Drilling is "HOT" all down in through here (we're living right in the middle of all this and see it happening everyday). Best Wishes!
Thanks everyone. So glad I found this site. I am going to hang on for now, and more research. I have no idea what town my sections are in, btw. I’ll have to look that up.
Best,
Jill
http://www.eia.gov/oil_gas/rpd/shaleusa8.pdf
Jill, this is the map of the Ardmore basin Woodford.
I am attaching the Marshall County map with the Township and ranges. See where you are in the Northwest Corner of Marshall. Prime Woodford territory. It is shallow and it is thick. I just checked Drilling info for the horizontal well permits on 8 and 17 and there are a bunch! They are ten permitted wells next door in 9. Three in 8, six in 17. I think there will be more in 8 coming. If I were you, I would not consider selling at this point.
2018-MarshallCountyMap.pdf (299 KB)
Thank you for all the input. This site a wealth of information. I'm hanging on for now while I do more research.
End of the story is I called the company who offered to buy my minerals, to see if this was a valid offer, and he did not return my call. So I would say he's no longer (or never was) interested in paying these rates for my minerals. So I guess it's time to site back and see what happens with the new wells. Wish me luck.
Jill,
I'm afraid most of the mailings I have received (or others that I have assisted) have either been just as you described or the offer was very much less than the value or the rights.
There are some honest and ethical people out there making fair offers, they just seem to be the minority.
Well, just received a call, took them 2 days. He said the offer is still open, and will remain open. He could not offer any more, but would honor the price quoted. He also said he would be willing to buy half, in case I want to hedge my bets. I am still leaning toward holding all interests, but sounds as I have some time to see how things play out.