Hi, all. I’m new to this whole business, so forgive me if this subject has been beaten to death, but I’ve recently been offered about $3700 per acre to purchase my mineral rights in Township 6N Range 62W Section 25. Posts in other threads would seem to indicate that this offer is quite low, but I’ve checked the activity maps and there doesn’t appear to be anything in development or been applied for in this area. The activity all appears to be well west of my area, with some a bit to the east. I’m at the age where making my estate as easy as possible is a bit more important than getting the top dollar, but I certainly don’t want to give my rights away. Opinions, or any suggestions as to where I could get more information to aid in my decision?
It’s low, but not unreasonable. They will produce from your tract at some point. If it’s a matter of getting the best value, try one of the auction sites; or, google ‘weld county mineral buyers’ and shop it around until you get many offers.
No bad news…just there isn’t activity there currently. You have choices…you can hold and wait (perhaps years and years) and then make a decision whether to sell or negotiate royalties…Your other option is to sell and close out. I don’t think that’s a top dollar offer and unless you need the $$ now, I’d be inclined to just sit on it.
Thanks for the opinions and comments. I’ll think about what I want to do. Should I decide to sell, are there any “gotchas” or other things I should consider while negotiating a deal? I’ll of course do my best to confirm that the offering company is legitimate, but is there anything else I should watch out for or make sure of?
If you don’t mind me asking who made you the offer? My wife inherited some mineral rights not too far from you I believe and I’m trying to get an idea on value.
I would echo what @nop_llc said - shop your interests around until you get several offers. That should help you understand the fair market value for your interests based on the market approach. To get a true feel for the potential of your interests you could also get a professional valuation to understand what the future royalty payments might look like and potential timing of when future wells might get drilled. That way you could make an informed decision about the tradeoff between future royalties and the lump sum payment today. Most basic valuations for the purposes of negotiating a sale will cost around $1000 but that investment could pay dividends if you are able to negotiate a higher sales price. I have a podcast episode that goes into more detail on how mineral rights are valued (and what to consider regarding potential tax implications).
The current offer comes from Phoenix Capital Group (the one based in Irvine, CA with offices in Colorado; there are several other “Phoenix Capital” companies). They’ve upped their offer and made it more tempting. They’ve been pretty forthcoming about when they expect anyone to drill my area which they say will be a few years yet or they’d offer significantly more. I’m at the age where waiting for some future possibility is less attractive than money now (as well as not leaving a mess for my estate, having no family who could inherit) so I’ll probably accept. Your wife may well be in a very different situation.
Awesome thank you! We are pretty young and are just wanting to learn more about the whole process and what the options are that could be available to us.