I have mineral rights on 5.5 acres in Caddo Parish part of the Haynesville Shale. Signed original lease in 2010 and have probably received approximately 8k since signing with 1/5 royalties. The section I’m in has one gas well and in November 2024 notified that three additional wells will be put in horizontal to section. Since then have numerous mailed offers to buy my rights. Plus actively have three companies with verbal offers of 58 - 60k. Understand tax advantages for sell versus royalties and financially it would be nice but not a necessity. Just wondering if they are expecting to recoup the cost plus additional money based on their research and experience experience with natural gas. Any recommendations or suggestions would be appreciated.
In general, operators do extensive geological and engineering workups before proposing a well. They have to prove to their management that the drilling will justify their expense based upon what they think it will cost to drill and what the expected prices will be for the products produced for a certain period of time. Sometimes they get it wrong, but they do intend to make a profit. A proposed well has to compete with other proposed wells in their portfolio.
Many offers to buy come right before drilling. Most of the ones I have received have been based upon the perceived value of the currently producing wells for a certain number of years-usually three to five years. They usually neglect to mention that future wells are coming as they intend to make a profit on those wells. Our family tends pay attention to the activity on our mineral rights and choose to hold onto the leases and collect the royalties for far longer than than the original sales offer. So far, we have been wise in doing so. We do our planning on a fifty year time scale, not a three year one. We have also benefited from improved technology and additional infill wells in many areas.
Many analysts are predicting that gas prices will rise over the next few years due to increased demand for data processing centers and increased LNG exports.
Thank you for the information and I’m glad I found this forum. Believe we probably will hold on to our rights for now and see what the future holds. Thanks again.
Was the 2010 well a horizontal well? When you say “that three additional wells will be put in horizontal to section” are you included in them? If so, are 3 wells permitted or just 1? If you arent included in the 3 wells, at 10K an acre when you have a well thats generated $8k over 15 years, thats a hard offer to turn down.