We have 440 acres of mineral rights in Dewey Co. The acreage is in section 22 (280 acres) and section 27 (160 acres) of 17N 19W. Both locations have producing wells from which we have received royalties for years. We have received an offer to purchase these mineral rights. $2,000 per acre in section 22 (3/16), and $1,333 per acre in section 27. Is this a fair offer? Advice?
Failed to mention that the mineral rights in section 27 are 1/8.
I'm no expert but in my opinion, no. I don't know how much you're receiving annually but my theory is, I could lease my property just a few times and get that much..... Just my two cents...
Susan Coolen
Isn’t it true that so long as there are producing wells on the property they are no longer up for lease?
Yes that's true. I don't know how much you're receiving in royalties, but they would have to offer me significantly more than what I'm making annually to make it worth my while to give up a monthly income.
I sold a portion of my mineral rights in Section 25 about four years ago....got $3600/acre. Your offer sounds very low, especially since you've been receiving royalties for years. When I sold mine, I had not yet began receiving royalty payments. KEEP your mineral rights; they're too precious to let go of and once gone are gone for good.
They are trying to buy your interest for what others are getting to lease. Here is what they were ordered to pay in a pooling close by.
http://imaging.occeweb.com/AP/Orders/occ5105107.pdf
Here are some completion reports on two of the first horizontal wells drilled in 17n-19w .
http://imaging.occeweb.com/OG/Well%20Records/1DD0B68E.pdf
http://imaging.occeweb.com/OG/Well%20Records/1DD051CB.pdf
This last well from May 2012 to May of 2014 has done 32,129 BO & 421,167 MCF of gas.
It will take more then one well to drain 640 acres and several new Co.s have started leasing in 17n-19w. Continental for one.
We are considering selling because I am planning to retire next year. The existing wells provide us a royalty presently of approximately $1,000/mo. They are waiting for my reply. In your opinion, what should be my counter offer? Or is this like nailing jello to a tree?
Ron McKenzie said:
They are trying to buy your interest for what others are getting to lease. Here is what they were ordered to pay in a pooling close by.
http://imaging.occeweb.com/AP/Orders/occ5105107.pdf
Here are some completion reports on two of the first horizontal wells drilled in 17n-19w .
http://imaging.occeweb.com/OG/Well%20Records/1DD0B68E.pdf
http://imaging.occeweb.com/OG/Well%20Records/1DD051CB.pdf
This last well from May 2012 to May of 2014 has done 32,129 BO & 421,167 MCF of gas.
It will take more then one well to drain 640 acres and several new Co.s have started leasing in 17n-19w. Continental for one.
Thank you for the information!
Linda Levesque said:
I sold a portion of my mineral rights in Section 25 about four years ago…got $3600/acre. Your offer sounds very low, especially since you’ve been receiving royalties for years. When I sold mine, I had not yet began receiving royalty payments. KEEP your mineral rights; they’re too precious to let go of and once gone are gone for good.
Are your wells deep horizontal wells? If not then you have a lot to gain in future drilling and production from horizontal drilling.
The wells were drilled years ago, before horizontal drilling.
Bear in mind also the capital gains tax, possibly 15% of what you receive. 280 X$2,000 = $560,000 + 160 X $1,333 = $213,280 total = $773,280 X 0.85 = after tax $657,288 would mean $115,992 in tax.
I have minerals in sections 21,22,23,27...but am not really up to speed on this play. I just got paid a week ago on a new horizontal well drilled by Lighthouse and have offers to lease from Superior (for Apache they said) and JMA...I am in the business and my sense is that it would be a bad time to sell i.e conventional play getting run over by a horizontal play...I also am sure that $2000 is too low....if you need retirement there are other options do not sell without talking to an industry professional...i would be happy to help you once i understand better what is going on as I am trying to get up to speed on my own interests here...if you have your original lease check to see if there is a segregation of the deeper rights meaning maybe there are lease bonuses for deeper right coming your way in which case a terrible offer...also follow the shakeout going on in oil prices and equity prices of independents...
Thanks everyone for the great advice. I need to be well informed before making a decision on this. You’ve been very helpful.
I'm glad to see everyone is of the same mindset as me. LOL I just think you can always make more $ in leasing/royalties than you can selling. Plus who are you selling to? Better to keep things w/the Little Ppl (us) than to let big companies get all the $......just sayin.... obviously there are folks here WAY more knowledgeable than I am. For that I'm thankful. Great advice!