With only 2.5 nma, likely multiple wells, but with good production, and prices staying strong, you could make up that 25K in a few years time.
Competition drives price. Nothing else matters. The supply/demand of the last year eliminated most competitive competition.
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Starting in late summer of 2019 mineral prices started to decline due to the reality or perception of a world oil over supply. That led to a pretty sharp reduction in Private Equity pursuit of mineral interest. We’d had offers in early summer of $10K to $15K per NMA and by September when reaching out to the buyers those prices and been cut in half plus they were scrambling for investor money that was not there anymore.
These guys trying to buy are really close to crooks a lot of them. There are a few reputable firms that are not out to screw you but even still they are operating using double digit discounted NPV calculations. So even the best are giving you well less than half the value and generally much less. They ARE taking risk of geo and price. So not a totally disjointed process to be sure. There is a price to pay for Delta Risk.
They all work for PE ultimately. Like I say doesn’t mean a deal is bad. Who know, possible we’d look to take $25K a NMA today. But that’s because it would be cash in hand, a huge life event. Knowing if the geo and pricing works as modeled, lots of money was left on the table. Or maybe not depending on what the reinvestment metrics yielded.
Good luck and invest wisely (ie think if you leveraged up on single or multi family and used the monthly royalty income to service debt on rentals and used rental income from each property to device debt of the next. And so on. Look up in a few years and you’ve got double digit rentals cash flowing and appreciating
Like said above, it’s a crapshoot to some degree, but I have additional experience to share. Second set of wells came in, I got over twice what the highest offer was in my first monthly check.
I agree with Todd, many of these guys are like the “we buy houses” signs on the side of the road. If I ever did decide to sell my house, it would not be to one of them.
I really appreciate the input. Any and all thoughts are welcome and appreciated!
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