Have had several offers to sell minerals in Sec 71, Block 1. Wondering what the going rate is?
Thanks, Janet
Janet,
First off are these offers based on:
1) net mineral acres;
2) net royalty acres;
3) or offers to lease your minerals?
Attached highlighted in blue is the legal description to which you referred. Looks like a great area and has a couple permits on it. I think you should be able to get a stellar deal. Let me do some research and asking around. I'll add you as a friend and then go from there.
327-Sec71Blk1LovingCo..jpg (1.07 MB)
To add to Donald, if it is a lease offer. He is exactly right NEVER take less than a 25% royalty. Also make sure you have certain provisions that protect you as the lessor included in the lease. Pugh Clauses (be careful on the language used), Continuous Development, Retained Acreage, Favored Nations, etc. Be careful that you have an experienced landman or oil & gas attorney check the lease before you sign. There have been cases where a lease has been signed and language was snuck in where it conveyed all right title and interest to the minerals.
The oil business is a gamble and all about negotiating, gathering information, and being transparent. You have an asset that someone wants. Make sure that you use that leverage and get the best deal you can possibly get.
Also beware of LOI's, where they get you to sign then it is off the market and you have wait while they go out and try to flip it. Beware of astronomical offers that then ask for a OPSA that locks it up for 45-90 business days, then they whittle down the price or what they want to buy. What you thought was $1 million could end up being $250,000.00 with a "take it or leave it".
Just do you research and learn about the company. Personally and I come from a family of 5 lawyers, be careful with them as well. Hours billed can rack up and sometimes they are negotiating for you but know that they are getting some cut.
Lastly, as the environment of the industry changes, I think it is wise to add certain provisions that reserve any water or wind rights. Why not? couldn't hurt.
Hope that helped, I have a tendency to ramble.
Jack's comments on water rights is a good one - some land owners in the Permian are making bug money selling water to operators for frac operations at rates in the $1 to $2 per barrel range. Considering that a single horizontal frac could use 100,000 to 200,000 barrels of water, this is not chump change.
In most cases, the person you are dealing with is a third party broker and not an employee of the operator that they are leasing the acreage for (e.g. Cimarex, Concho, OXY, EOG, etc.). In most cases, the brokers are instructed to keep their client's name confidential during lease negotiations.
Thank you so much to all who responded. I am thinking about selling, not leasing.
Janet
Janet
Like the other folks said, there are different factors that determine a purchase price. A person with less minerals, or mineral ownership not contiguous can bring a lower offer than an owner with a larger tract. So there's not always a once size fits all price. My client closes immediately upon title, which can be a few days. You can pick up the check in person in Midland Texas should you prefer. When it comes to selling, in the end, the best offer is in your best interest. Thanks for your time.