I own the mineral rights to some property bordering Weld County, Colorado (I’m technically in Larimer County, but Weld is bordering the front of my property). The area is Township 5 North, Range 68 West, 6th P.M. Section 2 S1/2. They are planning on drilling later this year with production starting early in 2025. 15 horizontal wells (7 codell, 8 niobrara) will be put in. What would be a fair offer if I were to sell the mineral rights at this point? Thanks, Ted
I would hold the rights and retain royalties. What is your negotiated rate? Especially since they’ll be drilling this year and you’re looking at 11 wells. Although I don’t know how many wells will transit your property, I’d be reluctant to sell. You’ll be pleasantly surprised by waiting.
1 Like
I would wait as well. Or if there is a financial need, you can sell part and retain part. Most offers I have seen will lowball in the beginning, so savvy negotiating would be important.
There are 2 general approaches that investors tend to use in making an offer price. What is your strategy? I do agree that you probably want to at least retain some of the rights. Investors are seeing value in the asset or they wouldn’t be making you an offer, but they may be willing to wait longer-term to capitalize on it, and you might have a better use or investment that you could pour the money into. That said, the 2 strategies that I see are 1) Low initial offer and try to get a great deal or 2) Really high initial offer without knowing what you own, and then looking for every possible way that they can reflect discounts so that they can A. get your attention with the big offer and then, B. discount the price to still get a deal that will allow them to meet their investing goals (like recover their investment principle in 3, 5 or 10 years, or build a portfolio for their grandkids, realizing that it might not be substantial for many years and provide limited appeal to their children).
Royalties are 3/16th. Approximately 4 of the 15 wells run the length of my 40 acre property, however in total there are 1700 acres and all are pooled together. I’m asking for a someone that needs the money now rather than spread over 20-30 years. They are aware that nearly 50% will come in over the first 5 years or so on these horizontal wells.
Then a 50/50 sell or 75% sell/keep 25% might be a good option to get good up front and long-term money for them.
Thanks for the suggestion. Sorry to say that it never occured to me that a portion could be sold. I think that will work for this person!
You’re welcome. Glad to help a little.
This topic was automatically closed after 90 days. New replies are no longer allowed.