When a company offers to buy your minerals that have a producing well on it what is the time frame that they use to estimate getting their money back on their investment, 5,10 years?
It depends upon the company and what their purpose is. Some are flippers and want to buy acreage for a low price and flip for a higher price. Some only buy for known production. Some know that horizontal drilling is about to happen or infill drilling is pending and they want the acreage for the current production and the new wells. Some buy for a certain return on investment within a certain time frame. You could look up the companies offering on their websites or in the news and see what they say their plans are (if they share).
For the ones buying for the investment what time frame would be the minimum - maximum?
Let’s assume the minerals are not in a hot area, where drilling of a well is expected to happen, or a second well is expected to be drilled. The general rule of thumb for purchasers is 60 months times the average revenue of the last 90 days attributable to the minerals to be sold/purchased. So, if a particular minerals interest produces $100/month of revenue, on average, the general value is thought to be $6000.00. Very general rule of thumb.
Thank you for the information. I appreciate it.
This topic was automatically closed after 90 days. New replies are no longer allowed.