My father heir to mineral rights located in McKenzie county T159N R96W S15. He recently received an offer of $5,000 per mineral acre to buy out his mineral rights. This is all new to us and I'm just starting to investigate his options and do not want him taken advantage of. Much of what I have been reading seems to indicate leasing versus selling. What is the going rate for each of these options? Thanks in advance for your help.
Jill, good morning... everyone has different needs, and every situation is a little different. more info would be helpfull, such as, are the minerals leased,are the minerals under the spud, are they producing and if so for how long, have you had other offers, there are others wayyy more smarter than me on this forum and the more info you are comfortable in sharing the better the opinion can be given............. as a sidebar note, I am a proponent of never selling, this makes the landmen on the board agrivated , but we do not need to go there again... Brian
Jill, there is already a well drilled in the first half of 2010 by XTO. Rossmiller 31X-15 66,698 barrels oil production, which is not alot and I think not indicative of the areas potential as Continental has drilled an at least 8 well unit just North and east of your section 15. I would not sell, but if you did sell I would collect the royalty owed before selling, 16% statutory non-consent royalty that is owed right now. The buyer will probably participate in the well or sell it to the operator for double what they pay you for it possibly lease it to the operator for more than they paid you for it and 23% royalty customary between oil companies and collect the royalty already accrued, I think you may be starting to get the idea. If you were to sell, I would sell it on the open market and not as a private deal as I believe the market will set a higher price than you are being offered.
I am sorry I was not able to open the wellfile and see what XTO put into your well in material and effort / expense. I have a poor internet connection here at the ring of fire. I think it's a safe bet that XTO didn't put their best foot forward. Do a lot more research and I will see if I can't find more. Don't be in any hurry, you already have money owed to collect. Good luck.
Thanks for the information. Very helpful. Were you able to view the week file? Can you recommend a good attorney in the area?
Jill, date of first production appears to be 6-22-2010 and the gas disposition appears to be sold. If you have good marketable title, there may be some serious interest on the money owed to you as the operator has 150 days after first sales or he owes 18% interest per annum (1.5% per month). Maybe not a huge amount of money but nice if you can get it.
Jill, I finally got into the wellfile. It does not appear that XTO totally blew off the completion but they only used half the sand that better operators use nowadays. There were also only 18 frack stages which I think most operators would have went with 27-30 frack stages. XTO also I believe missed it, they drilled a 10,000 foot lateral and decided to back up to the kickoff point where the lateral starts and drill a new lateral. All in all, I don't believe XTO put their best foot forward on your well. There is no question that you would not want to invest in this well. The area is better in my opinion than this well represents. If XTO does not drill better wells in the future, it will be because they don't like money.
The Continental wells near you are so much better produceing 20% to 50% or more in 1.5 years vs your well's production over 4.5 years. It's really too bad we don't get to pick the operator. If you are not dying for the sale price, which you would probably have to pay 15% tax on I would consider keeping the acres.
I won't tell you not to sell but I will remind you of the 15% tax and if you don't collect the royalty owed right now, the buyer will. Good luck with your decision.
Thanks again. Any local attorney referrals?