We inherited some mineral rights in Dewey County. Locations are NE/4 Sec22 T17N R14W and NW/4. Sec 29 T17N R14W Neither is producing currently. I’ve been approached by a company that did a little research and said these aren’t in great locations, and that test wells had been drilled and didn’t show much promise. He said offers are running around $250 to $350 per acre to buy. Can anybody tell me if those numbers are fair prices or provide any other info? Thanks!
I am always rather amused/annoyed by the “Gee, it’s not worth much, but I want to buy it (for not much)” line. Offers to buy are usually from someone who thinks they know something and wants to buy low and sell high or drill. The test wells that were drilled before are not necessarily the reservoirs of the future.
If you have no need to sell, then you do not have to. Devon and Derby have permits in 18N-13W, so time will tell to see if they move your way with additional drilling in new horizons or do infill drilling in the current ones.
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Thanks for your reply. So there can be more than one reservoir? I am curious about that, can you expound on that? Family wants to sell, I am not sure. How do you determine what a fair value is? Is $250-350 per acre a standard amount? Thanks!
Depending upon where you are in OK, there may be 1-20+ different reservoirs. In the old days, only conventional reservoirs such as sandstones or limestones were considered reservoirs. In the recent few years, there has been a tremendous amount of drilling in shales and it is just in the beginning of its technical extraction cycle. New technology is making areas of OK open to new wells all the time. I am rather patient on the time as I think generationally.
I rarely believe the stories told by a landman or a buyer regarding reservoirs and who did what research unless they quote extensively their sources. I am a geologist with decades of experience, so probably have a better background than they do. They work for their boss and tell the story they are given to tell. I work for my family and want the best long term return for my family. Rarely do “they” tell the whole story. I cannot predict the future either, so sometimes I know the pending activity in an area and sometimes I do not.
The offer they made is what they are allowed to offer. Offers to buy can range from very low amounts to tens of thousands of dollars in parts of the Permian Basin. There is no standard amount. They are based upon the premise that the buyer expects to make a certain amount of money in a certain amount of time and they want a profit off of my acreage. I prefer to keep that profit if possible.
Why would I want to sell when I am told in one sentence that it is worth “not much” after doing a “little research” but we will give you “this much”? Most deals that I have seen have been lowball first offers (which I ignore) and then over time (sometimes many years) we have seen much more in royalties than that first offer.
If a family has a severe need to sell, then that is another story. I would get several offers to buy and select the best. Or only sell part of the acreage and keep some for the future. Timing and competition is everything. Gas prices are really low right now, so offers may be lower than they might be when prices rise again.
I tend to hang onto acreage. Other owners have different opinions.
As my attorney told me “a fair value is a willing and informed seller under no compulsion to sell and a willing and informed buyer under no compulsion to buy agreeing upon a price.” Unfortunately, the mineral owner is rarely as informed as the buyer.
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