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.
Yes our section will have all three wells plus the original that was also horizontal.
When we got offers to buy our minerals, we knew something was going or about to happen. Hang onto your minerals.
Thanks we kept them. Hoping to see more activity.
Youve posted to not sell your minerals a few times recently. Im very curious, if you had acreage that had a horizontal well already drilled on it that only paid the mineral owner $8k over 14 years, you wouldnt sell atleast half of the 5.5 acres, so 2.75 acres at $10,900 an acre for $29,975.00? Id love to hear your reasoning behind that if you dont mind?
Well, you can sell. It’s your decision. I just think it’s more prudent to hang on to them. Im no brain in all this. Is someone offering you money for your minerals? In my experience, when a company or landman offers $$$, it means (to me) something is about to happen. This usually means a new well is planned or existing well will be adjusted to another paying zone. Some wells have more than one paying zone. Good luck!
Depending upon the spacing, the answers may be expanded. For example, in a 640 spacing, that first horizontal will probably not drain the whole acreage. Many companies drill a first well in many different spacings and then come back some time later to drill the infill wells if the pressure is still high enough and the economics warrant additional drilling.
As technology increases, many older wells may be candidates for re-fracs and additional royalties will follow. Enhanced recovery techniques may increase production/royalties down the line.
HIghly dependent upon the geology, the operator, price of products, technology, new reservoirs in between, above or below known reservoirs, etc.
The prudent thing to do is look at the price offered to sell. Once it gets to a certain number, its unprudent not to sell 1/4 or a 1/2, take those proceeds and invest in the stock market if your goal at the end is to make as much money as you can from them. Mineral companies that spend 10’s of millions a year go out of business every year, why? Bc they paid to much for the assets, meaning the people that sold their minerals made more off the sale than the company did off the production. Yes, I get offers every day and yes Ive sold many times and held on to the minerals many times, it all depends on the price offered. In my experience, the 2nd and 3rd horizontal wells drilled never get close to the production that the 1st well drilled did, maybe yours has been different and congrats on that. I dont look at minerals as sentimental and something I want to pass on when I pass away as a “legacy”, I simply view them as a way to make more money without using my own. To each their own and good luck to you as well!