my name is Kurt. I represent my elderly father who owns 160 acres in Noble County. he has two offers to buy his mineral rights. one from Red Stone the other from United prospects. they are both offering $1500 per acre. we are not knowledgeable in the value of mineral rights and were looking for some help to figure out if this is a good deal or a bad deal. i welcome your feed back and opinions thanks
Is it leased ? Do you need cash ? There is a lot going on around you .
I'll get you some more info.
I found well permits for 15 sections in 20 n-1e. That is 15 out of 36. and there are more pending.
do no need the cash, but it is a large sum of money to pass up. it is not leased.
Ron McKenzie said:
Is it leased ? Do you need cash ? There is a lot going on around you .
I will get you some info later today. They are just getting started in 20n-1e and some big players are coming in.
I show Devon is getting the paper work filed to drill 8-20n-1e. with a horizontal well. They should have sent you notice of the filing. Have you received anything ?
yes we have that notice. not sure what that means to us. any help in understanding is appreciated. thanks Ron
Ron McKenzie said:
I show Devon is getting the paper work filed to drill 8-20n-1e. with a horizontal well. They should have sent you notice of the filing. Have you received anything ?
Here is a map on here for Noble Co. I sent you a friend request with my phone # . If you wanted to call I can give you some info. I found.
http://www.ok.nrcs.usda.gov/technical/GIS/CountyBaseMaps/CountyBase.html
Kurt, there have been offers in the area that are higher than $1500. If you do decide to sell, you can also contact the interested parties and see who will offer you more. Don't be afraid to ask. These offers probably won't go away any time soon so don't be afraid to wait, especially if you don't need the money. Offers will come in after a well has been started. Also realize that you don't have to sell all 160 acres..you can do it piece meal if you want.
I am not highly informed about all of this, but live here and have had one well completed and also have land in 9-20N-1E (already leased) so I am getting all of the mail you are getting most likely.
Also have talked to some folks who have put pencil to paper and have decided to sell some of their mineral rights. It had to do with how the income is taxed on oil income vs. selling outright. Now, I pretty much glaze over when income and taxation discussions get that technical, but that may be something worth looking into when you try and decide to sell or not. The individuals I talked to looked at how much oil they would have to be payed for before they would make as much as selling the rights, taking into account what is left after taxes. One guy sold 160 acres and leased 160 e.g.
I hope some one here can shed some light on the tax advantages/disadvantages of selling vs leasing...its over my head but seemed to be a reasonable if not wise way to make this kind of decision.
Either way, don't be in a hurry just yet, plan ahead, talk to a lawyer and talk to an accountant.
Kurt I have some information for you . Please call when you have time to talk .
Kurt,
I buy minerals in Noble and have been paying at least $1800 per acre, if I were you I consider selling at most 1/2 that way if they never drill or drill and it's not a very good well you have locked in some value as minerals had been selling for $400 per acre or less for years there in Noble and when they move on out of the area prices will slowly come down from prices being offered now. So many counties in Oklahoma that they were leasing and drilling for gas a few years ago were selling for thousands of dollars per acre, now I see them selling at auctions and only getting $300 per acre and some as low as $100 per. As for taxes, if you sell any and have owned more than 1 year then you will be taxed at a long term capitol gains rate as shown below and lease bonus and royalty payment will be taxed at an ordinary tax rate for single person also listed below. It is easy to go from paying a maximum of 20% on capitol gains rate to paying like 28 % just on lease bonus alone.
Capitol gains rate:
- 0% applies to long-term gains and dividend income if a person is in the 10% and 15% tax brackets,
- 15% applies to long-term gains and dividend income if a person is in the 25%, 28%, 33%, or 35% tax brackets, and
- 20% applies to long-term gains and dividend income if a person is in the 39.6% tax bracket.
Ordinary Income rate:
- 10% on taxable income from $0 to $8,925, plus
- 15% on taxable income over $8,925 to $36,250, plus
- 25% on taxable income over $36,250 to $87,850, plus
- 28% on taxable income over $87,850 to $183,250, plus
- 33% on taxable income over $183,250 to $398,350, plus
- 35% on taxable income over $398,350 to $400,000, plus
- 39.6% on taxable income over $400,000.
I have been around a lot of old timers who have lived through the various booms. There is a golden rule: Sell your soul before your mineral rights.
I always remember that when rich New York bankers or foreigners come tempting many strapped locals with cash, it happens every boom. Problem is, they never go away, and the rest of us get to live with them and their eternal attorneys. Good luck.
Kurt, I've been trying to think of a better way to explain the true value of minerals. So, here is my best shot. Why would someone want to pay you so much money for something just sitting on record at the court house? The simple answer is because they see more value in it than they hope you do. What value? All the original settlers claimed these minerals, and over the years died and passed them down to their families, and sometimes speculators or foreclosing bankers took them, but for the most part everybody saw the minerals ( family legacy) as a tangible asset. Federal Reserve notes aren't tangible, as their value is manipulated by markets and central bankers; the economy. Bank notes aren't any more real than what someone offers to take them for, but your minerals are. Minerals are resources, and they are a commodity which can be bartered in a potential future when the paper falters. So now you have to understand what you are potentially giving away. The best 1/4 section striking a Misener, Wilcox, Arbuckle, or even a Reagan sand can generate maybe 2 or 3 million barrels in Noble County. 18% of that is close to a million barrels over 15-20 years, but most of it will come in the first 3 or 4. A mineral owner with a million bbls booked in reserve is worth 50 million minimum. Ok, long odds your great grandpa was the wise one, but wouldn't you be sick settling for 2 or 3 hundred grand after the well with your family name comes in making national headlines? Many people need to sell, but just don't if you can help it. I really just care about the locals getting good wells. I am fundamentally against people doing things which may not be in their families long term best interest. I work in the industry, but out of personal principal, wouldn't buy a families minerals, but instead would just lease and test. Just a well thought out opinion.
Chad That was well done .
Chad,
Can you name any well in Noble County that has produced 2 or 3 million barrels of oil or even 1 million barrels of oil or where do you get that figure?
Also, if one well in a 1/4 section produces 3 million barrels of oil then a full section could produce 12 million and at 18% royalty you mentioned, the mineral owner would get over 2 million barrels to himself and then you would be saying those or any Noble County minerals may pay well over $260,000 per acre over 15-20 years at today's oil prices to the mineral owner with that one well, is that what you were saying? and if so what price per acre do you say they are worth? Also, have you spoke with any operators or many mineral owners in Noble county that have a new producing well in any of those formations or perhaps what their heirs have made per acre the past 100 years?
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Uh, Joe? How about that question I asked you? You know, the one about where I said I saw Three forks potential and you said
"How in the heck did you come up with that tract having produceable Three Forks? Wow, what other produceable formations do you see there? If your going to bring up taxes then you should explain that they are probably in a 28% tax bracket so capitol…"
If you look at the depth of the wells, it appears that one of them is a Three Forks, it's just that the state classes the TF and Bakken pools together.
I said Red River and Duperow.
I also asked, What? No comment?
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Joe, I think you need to get over feeling threatened by every comment that someone makes saying do not sell. You have a personal stake in people selling their minerals because you buy and sell minerals.
I agree that Chad's numbers are too high, it does not invalidate his point though, that the minerals may be worth alot more than $1500 less capital gains tax of 15% = $ 1,275 per acre.
Joe, how much someone has made off an asset over the last 100 years makes no difference, if you owned gold for the last 100 years and never sold it you made nothing off of it over the last 100 years. Oil in the ground and gold are both commodities capable of appreciation. If I showed up with a wagonload of cash 100 years ago and offered these people $1,275 per acre for their land with minerals, I think they would have sold it to me with no questions asked. I would say do a logic check of your own arguments, if you can get past your personal stake in needing people to sell their minerals because that is your business.
Chad I'm not going to get into the grown ups discussion above,but my great grandfather felt strongly enough about the minerals he had there was a clause his will that none of his heirs could sell them.I dont know how that would be enforced,but those were his wishes.You also make a good point on the value of a commodity vs paper money
Joe,
I would be happy to recollect what I remember about this area. Hmmm, there are a hand-full of wells in the Lucien field which meet this criteria; the Pfieffers in 29 and 32 of 20N-2W, a few of which made over a million barrels of crude apiece in the mid 30's. A great anticline! That field produced stratigraphically 4 miles northward in a trend bound by structural thrust faults laterally. It fined upward through the first Wilcox at the north end, then truncating to an escarpment. A great fault marker. Two additional fields are broken off elements; one in 4 of 20N-2W and another just south east of Lucien ?? forget the legal. These were at least 1MMBO fields ( 20 acre spacing). A nice 500k Misener ENE of Lucien still sits still, forget the name. I could go on, but that is something you can look up.
As you may know, gross barrel measurement was a subject of question back when money was measured in silver and oil sold in wooded barrels to trains... The greater Lucien area made approximately 50 million barrels no doubt, just who knows exactly how and when??
The Misener was hit just east of Orlando in 31 of 20N-1W on a farm between 2 wells, and is approaching 3/4 million barrels with the Crews sand as a bonus. Ramsey field, in neighboring Payne county (where Devon has totally leased around) made several million barrels per quarter over maybe 450 acres. Pawnee, Lincoln all have the same geologic story. All really I have to say is that when the oil is found, it wont be over a whole section usually, but in strands contained in quarter sections. That's why you are interested?
I am having a hard time understanding the last part of your paragraph's questions involving hard numbers with specifics. Its not about the numbers so much as the value, numbers are relative, minerals absolute. As I said, minerals to me are sacred, and they aren't for sale. I would not recommend selling them unless the bank is about to take them, and I doubt you would sell yours too? that's my whole advice. To me, Lease it if you want it, drill it to please the landowner and your oil company and just. . . . Honor the family; 80% is more than enough. Hope that clarified my position.
t w kennedy said:
Chad I'm not going to get into the grown ups discussion above,but my great grandfather felt strongly enough about the minerals he had there was a clause his will that none of his heirs could sell them.I dont know how that would be enforced,but those were his wishes.You also make a good point on the value of a commodity vs paper money