I asked this question once before and jumped on the deal. Now I have an opportunity to buy more mineral acres from the owner. The cost is $2500 an acre in T29 R58 area. It is currently spaced 1280. My question is: Is it a decent deal still? Is the EPA potential fracking issues on Bakken wells something I should worry about? What are your thoughts and would you make this investment right now?
Regards,
Kevin
Kevin:
Sounds like a deal to me at $2500/acre, seeing how you can lease these minerals for over $500/acre (conservative figure) and possibly reap the benefits of royalties for several years to come. Your question about the EPA and fracking issues will be a hot topic in 2012 as new proposed rules would require complete disclosure of the fluids pumped downhole. It is my understanding the Montana is one state that has required this disclosure in the past. The most reliable answer to your question is actually nobody knows what will occur in the future in regards with the EPA. I wrote a semi-blog under the "Fracking" heading in this forum and stated information that I read from the Billings Gazatte newspaper. It is my belief that the industry will provide meaningful support in it's effort to work with the EPA and this issue will be settled without the shut down of fracking procedures. Again, this is my opinion but no one can predict the future. Congratulations on your possible aquisition of additional minerals in an area that could see much development over the next couple of years.
I would say that is a GREAT deal as some have LEASED for $2000 an acre in areas close to wells. If there is a producing well on minerals they are being appraised at $12,000 an acre to sell; so I would buy at $2500 if I was 20 years younger!!! Don't worry about the EPA/Fracing; it will be looked into and companies are more careful about handling their chemicals and they have to fill out more forms about what they use; but they are NOT going to put the brakes on Fracing!
If there is a well that is producing not too far away I would consider it a bargain. I had my PRODUCING acreage in T28 r57 appraised at $10,000 an acre; with oil at $105 and many thinking it will go higher it is a nice safe non preticipitory investment if you have the cash to tie up for a few years !!!