Hello, I have the option to sell both surface and mineral rights back to the tribe. I have the appraisal price and do have the option to negotiate with the tribe. I have never done this before, any advice on how to negotiate for a larger amount? Thank you.
Be sure to understand any potential tax consequences from capital gains. Many people are surprised come tax season. Ask your tax professional about “basis” and how that relates to tax consequences.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
2 Likes
Depending upon your location, you may want to consider any pending activity as that might not be factored into the appraisal price. If you give the section, township and range, we may be able to help.
Hi. It is allotment No. 801 1306-A, “Heap of Hair” E NE NE; E W NE NE; N NE SE NE; NENW SE NE of Sec. 14 TWP 14N, R10W, Canadian County, IM, Oklahoma containing 37.50 acres (I own 1/10 of those acres, surface and mineral). I do have an appraised price on it but was wondering if I can ask for more. There is current drilling on it, but the lease checks have been extremely small the past two years. The other one is Allotment No. 801 1441, “Rambling Woman” described as NW of Sec. 15 TWP 13N, R12W, Blaine County, IM, Oklahoma containing 160.00 acres (Again I own 1/10 of this, surface and mineral)
SLOW DOWN. 14-14N-10W Marathon is the current operator for Heap of Hairs BIA. They were just bought by ConocoPhillips last week. I suspect there will be some adjustment of priorities in the next few months.
From a potential point of view, you have about half of the reserves for that well still left in the ground. So many more years of good production. Depending upon the date of your appraisal, it is likely tied to that well and using the lower gas prices of recent days and a predicted strip price for a few years out. HOWEVER, the section to your east, 13, has TEN horizontal wells, so you potential for infill is high. That is probably not included in your appraisal. Do you really want to give that opportunity up? Are you willing to wait it out for a few years? Royalties have been lower in the last few years due to normal decline in volume produced from the horizontal well and lower gas prices. Gas prices are predicted to go up in the next few months due to more LNG export capacity.
Are you also getting paid for Coterra’s Rother 1-14H on the west side of the section? It has about 2BCF left, so many more years. Is it included in the appraisal?
15-13N-12W I only see the Reimers 1 by Piper Operating in this section. Almost done. But also in a horizontal area with potential for more wells. Several companies are filing cases near you. I cannot find a Rambling Woman in the OK records. Might have been a tract name but not a well name back then.
You have several options. You could sell the land back to the tribe and get some value from that. Make sure you get an attorney to sever the minerals so you can keep them. You can sell all the minerals, part of the minerals or none of the minerals. I am a geologist, not a petroleum engineer, so cannot comment on the exact value, but you sure have the potential of having more drilling in both of those sections in the future, so think on your timeline before making a decision.
1 Like
Yes you are right, I spoke with BIA’s IIM dept and got the jist of what taxation would like.
So I am not sure if this is within the 10% that I own. What exactly is BCF? I am so not familiar with all this and am just starting to familiarize myself with this industry.
As for the Rambling woman (Nowase-Blain county) there is a Piper Operating LLC on this allotment, it is leased to them. I am showing Piper, Cimarex Energy company and Marathon oil company between the two allotments.
I am willing to wait if these wells have a high potential for production. But I believe you stated that the Piper LLC who is operating on Rambling woman is almost done as far as the well running out? i believe Rambling woman (Nowase) is the tract name and not the well.
BCF= billion cubic feet of gas. You will get your portion of that based upon the net acres, royalty and percentage of the well in the section.
Yes, Sounds like you have the three wells I found. You have potential for horizontals in that section. 15-13N-12W. Ask the BIA if future wells are included in the evaluation.
For comparison Heap of Hairs has about 3.7 BCF left and about 70,000 bbls of oil. To about 5.7 BCF plus multiple horizontal infill well potential left. You should ask them if potential future wells are included in the evaluation.
You were smart to contact the BIA about taxation. You would probably have capital gains tax.
So, in short, your basically saying that new leases could be happening soon and that for one leasing site ConocoPhillips took over and that there is high potential for further production? I know that my decision to sell was based on me owning this for over 40 years and I pretty much thought that the wells were getting to the point of being used up and were not producing as much anymore hence the low royalty checks (shows how much I know about this industry). But if you’re saying that they are still productive then maybe I need to wait. Is there any way to have a conversation with you? I know you said that you did not know the value of the well sites, but I am wondering if I told you the appraisal price would it seem fair in light of what you are relaying to me? Also how long does a well typically last? You have been extremely helpful in all this so I thank you very much!
As a mineral owner in a nearby section to the Heap of Hairs well, I can tell you that Martha is giving you good advice. Now is not the time to sell.
2 Likes
You may be held by old leases or forced poolings on the producing wells for many more years. If the current or subsequent operators come in and drill infill wells, then that is how it works during the secondary period of the lease. If you were pooled at one reservoir and another is being started, then you can be pooled again.
Some of these horizontal wells can last for decades. About half of the production volume from a horizontal well occurs in the first four years, but those wells can hang on at low volumes for many decades. Think of a hockey stick with the blade being those first few years and the stick being decades longer.
I cannot really comment on an appraisal except in general terms since I am a geologist and not a petroleum engineer. Depends upon who did the appraisal and for what purpose. If it was a buyer doing it and they only included current producing wells, then I would doubt that it would meet my purpose. If it was a certified petroleum engineer that did it for a probate and included current drilling and potential new drilling then I would be more inclined to think it was in the ball park.
We are only in the first phase of horizontal drilling. We still have refracking, secondary recovery and better techniques to come. New reservoirs are also being opened up, so our family holds onto acreage that is producing.
1 Like
Thank you for that confirmation. I am definitely going to rethink all this because so far… Martha, yourself and another person said to not sell. Thanks again!!!
Wow thank you Martha. I have learned some very valuable information from you. This definitely helped me to come to a more sensible decision in all this. The appraisal was done by the BIA for the Cheyenne/Arapaho tribe. Of course, I opted to negotiate for a higher price but at this point I am going to pull my application to sell and hold onto the land. I can wait a few more years!
I have another question, Martha. I just spoke with an IIM account representative, with me asking the question of when does a lease end. She stated that marathon oil looks like it had leased my sections in 2017, but it stopped production, due to no oil producing from the well. Which does not make sense to me because I have statements where they have recently paid me royalties. I did try calling the BIA in Anadarko to get some information but no luck. Question is: Did Marathon at one point stop production because of a dry well?
14-14N-10W Heap of Hairs BIA (Marathon) has been online since 2017. Last production is posted through May 2024. Both oil and gas.
14-14N-10W Rother 1-14H (Coterra) has been online since 2011. Last production is posted through May 2024. Both oil and gas.
15-13N-12W Reimers 1. Been online since 1975. Last production listed as March 2024, so may be at the end. Both oil and gas.
Not sure what the rep was looking at.
Thank you again! I am going to follow up with BIA.
Hello there, have 270 acres in mingo West Virginia where I own all the mineral rights …I have multiple gas wells on 17 leases,what is the approximate value, excluding the wells, just for the rights?
Welcome to the forum.
The royalties from the wells are what give the mineral rights their value. Plus any other acreage that is not yet drilled. You probably won’t get much interest in buying if you are retaining the wellbore interests as buyers want the royalties. You can find an appraiser in the Directories tab above. Vass appraisals does the eastern states.