Good evening. I own some producing mineral rights in Lasalle County, Texas (Eagle Ford formation). All horizontal wells producing oil and gas. Periodically, I get offers from various companies wanting to purchase these interests. Seems like they are offering 40x the current monthly royalties. Anybody in this group familiar with the formulas these companies use when purchasing mineral rights? Thanks for all replies.
I’ve been getting offers for more than “40x”. Different companies offer different amounts. One thing’s for sure, they figure your minerals are worth more than they’re paying. I have ignored every offer and am glad I did.
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Each company has their own metrics for offering to buy. Some buy and flip, some buy and hold or somewhere in the middle. In general, they tend to offer to buy “before the bit”, so they want to buy where they are pretty sure someone will drill in the next few years. Many have a three-five year payout calculated into their offer. They plan to make a profit off of your minerals. Sometimes they do; sometimes they don’t. Some offer a flat amount. Some offer 40-60X your current royalties, but what they aren’t telling you is that they know that future drilling may be coming and they plan to make much more than what they are offering.
Mineral owners need to consider how mineral ownership factors into their financial plan and decide accordingly. Many mineral families think long term and generationally so they keep their minerals if they are in good areas as they are aware that ever increasing technology and good product pricing may make additional reservoirs more attractive. The horizontal drilling and completion technology is expanding to three mile laterals and four mile laterals. Infill wells are what the buyers want.
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Have u reviewed the u of Texas rates and damages guide yet
UT Lands Rate & Damage Schedule has nothing to do with mineral valuation and sales. It is not relevant to this topic.
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Martha, Ive seen you and others state that mineral companies know that future drilling is coming, as if they know something that nobody else does. Due to all the court cases going on for years now centerted around in-house landmen and non op and mineral buyers, are you saying that “insider trading” is still goin on? If so, that’s a bold claim that would end up in federal court. If not, then they are just using the same info that every person on this board can use since spacings. Poolings, drilling permits etc etc are public knowledge and anyone can find online.
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Yes it happens. CLR buys minerals where it is going to drill new wells under the Mineral Resources name. Many companies before them have done the same. Nothing illegal, nor should it be.
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The Landman basically is between u and your money. It costs nothing to not lease
It is just good old fashioned networking and hard work-not necessarily insider trading. Landmen are at the county courthouses (and online) all the time and can see which books are being pulled; folks are wandering the halls (and online) of the Corporation Commission and talking to their buddies; landmen and geologists are attending their society meetings; operators are aligned with either their own land companies or contracted ones; multiple free and subscription sites are posting data all the time: rigs have tracking devices on them.
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All that means is your minerals are worth more
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These statements cost people money all the time. I’ve sold minerals when I’ve received an offer that people with this sentiment deem “way too low.” And guess what? after 6 years AND additional drilling, that investment still hasn’t paid out for them. Whereas, I’ve used that money to generate an additional 150% return in that timeframe. So were my minerals worth more than the number I received?
You’ve done no work-up on the land or provided any valuable feedback to the OP other than saying “your minerals are worth more.” That is not helpful and merely stating a baseless opinion.
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