Our family is considering selling one of our properties in Converse County. The Legal Description is:
Township 36 North, Range 70 West in Section 4 - over 150 Net Mineral Acres in the Teapot Formation. This is Federal Land.
There is a company who is planning on exploring it, but it has otherwise been virtually unexplored. We've been told that the minimum we should ask for this acreage is $2700 per net mineral acre, which seems low to us .... considering it's planned development.
No doubt we will get all sorts of low-ball, ridiculous flipper quotes as we market it, but if anyone here has a good idea of ball-park prices for this area, we would greatly appreciate your help in determining a fair price.
Thank you in advance for any help you can provide.
take the money. $2700/ac is outrageous.
By what criteria do you offer this opinion? The knowledgeable parties we've spoken to in the area believe the price is too low, considering a major is planning exploration and development.
I have an 11th Commandment "Thou Shall Not Sell Thy Mineral Rights"!
First and foremost, DO NOT SELL YOUR MINERAL RIGHTS! Most companies making offers out of the blue normally are offering pennies on the dollar.
In several previous leases, I have accepted an offer as high as $2000 an acre and recently I leased some area that was not currently active for $500 and acre.
My I suggest you read the post & responses from a previous which was asking the same question.
http://www.mineralrightsforum.com/group/converse-county-wy-oil-gas/forum/topics/mineral-rights-buy-out-offers-in-converse-county?xg_source=activity
Good Luck,
Bill
Mark, what I would do is look at what people are paying for leases (not too many sale transactions like this out there), but 10 year federal leases nearby and even 5 year state leases are comparable to a fee purchase. Those have long and medium duration terms (as opposed to fee ownership being unlimited) but are easy to extend and offer better royalty percentages to the owner than fee. All of that is readily available online. You can look through previous sales on sites like Energynet and OGclearinghouse.com. But this is a moving target, whatever deal you can strike, no set price here. Do you have a buyer? And/or more info on the development plans? It is of the size deal I could do but I'd like to do some serious research. You can email me at [email protected] if so.
I note the private fee mineral transactions in North Dakota recently with producing wells already on them are going for $10k an acre. Federal leases in Lea Co, NM going for up to $2-9k an acre in good areas. And state lease in Wyo at the last sale a township away from the EOG Codell play in N Converse Co went $4k an acre. I also picked up a non-producing override in Loving Co. Tx recently at equivalent of $1k an acre., then EOG made a discovery in the next township so I'm sure it's worth a bit more by now.
I tend to agree with Craig Slawson in some ways but it depends on what data you have.
Criag Slawson, If $2700 was the bonus offer, yes that would be outrageous but when selling the minerals it seems very low to me considering I have received a $2000 an acre bonus on a 4 year lease with a 2 year option. Since then I have leased some of that same minerals for $500 an acre so in less than 7 years I have been paid $2500 per mineral acre in just bonuses. I am also receiving royalties on some of the producing minerals with the first check was several times greater than that per mineral acre.
Bill
Chiming back in…agreed on never selling but motivations and needs vary…and most important so does provenance. It depends where your acreage is. Do the hard work or hire a geologist.
His acreage appears to be on the edge of an old Teapot field, vertical wells discovered in the 70's. Looking back, he didn't say he had an offer, but friends advised him of the $2700. I don't use the 'never sell' mentality, one could be sitting on goat pasture and that'd be a great price for it. But I do this for a living. Also, one may need the money for a new business that ends up doing very well. Still, it's difficult to beat the return on minerals you paid a few bucks an acre for that happened to be sitting on multi-stacked oil but it can be done.
I agree Bart and I to do this for a living also. I own minerals in 219 counties in the State of Texas and 67 other counties in 9 other states. I have seen over the years that minerals sitting for 30+ years in what is considered non-producible areas have ended up in the center of large plays numerous times.
I always figure that if not in my life time then in my son or grandkids lifetime they might be. Over the years I have purchased many properties which convey the minerals and then sold the properties for the same price or a little less while retaining the minerals. I started in 1974 and now has become very lucrative. What I have found is that when an individual dies and leaves his/her minerals/property to his/her heirs, they do not understand or care what they actually have but are so often just wanting the money. I always try to explain what they are selling and giving up on by just wanting the immediate funds. Once a good well comes in on what was once their property, it eats at them. I personally hate to see that and that is why I always try to convince them not to sell. In Texas, mineral rights are not taxed till they are productive so if you own them and they are not costing you a penny then why sell them. Time & Time again I have made this information available yet they sell anyway and that is why I am now retired from my original lively hood.
Have a blessed day,
Bill
I sold some Spraberry minerals in Ector Co, TX about 15 years ago. Sure would love to have them now. But it got me to the next deal and paid the bills, I got about 6 years worth of production up front. I saw recently where they're getting drilled horizontally in the Wichita-Albany and making good oil. Glad someone is making money. I'm doing fine. I was able to replace them and go on. Plenty to go around for anyone who wants to work. You gotta factor time value of money and understand valuation, but yes they do have great IRR's when they hold lots of oil. I think people understand that. A hustler can do a lot in 30 years while mineral rights are sitting dormant. With 286 counties worth of minerals, it sounds like you or your Dad convinced a lot of people to sell their minerals!
Actually, some of my minerals date back to my grandfather who started back in 1912 buying minerals. When I was young, I listen to him and now am the only one to pursue the minerals as part of my livelihood. He told me how to do it and when I was 13, I sold a small company I started when I was 9 in Parks Cities, Dallas and began to buy what I could in property and minerals. At 14 I was emancipated and became an adult with my own house, ranch & truck. I never looked back and retired at 47. I am now 56 and feeling so blessed just managing my minerals.
As for Ector County, I am enjoying the proceeds from Apachie's newest developments. All of the Permian Basin is on a New Boom.
I believe the OP is not in the business. As Bart says, he sold minerals that he wished he still had but paid bills and replaced the minerals sold with other minerals. Someone not in the business is not likely to stumble across some minerals that are staring down the barrel of exploration at reasonable cost to replace what he sold.
I do see your point, rw. But is the OP merely testing the waters or does he need the money now? As a land player, I know that the buyers available to him now if he needs to sell would have to know what they're getting. If a big company decided to lease up this land, then he'd just stick around for that versus sell. Clearly, they're not yet. If I were to take a deal like this, either buy or lease, I'd offer someone a non-refundable option fee, agree to a strike price and then set about doing as much evaluation as I could over about 45 days. After the evaluation, either close on it or walk away.
People do sometimes want to sell, it's a healthy part of the market, always has been. Either to get out of debt or to speculate on something they know more about, for instance. I hope the OP will shed some more light on this post.
I want to thank everyone who's replied to my post. No, this is not a primary source of income. There is a family situation (not mine) which warrants the sale of ONE of our properties. Otherwise, we believe in and follow Bill Osborn's 11th Commandment: "Thou Shall Not Sell Thy Mineral Rights"!
I appreciate the advice that's been extended, and I will be contacting some of you this week. I KNOW the $2,700 absolute minimum price is way too low. I have more research to do, but I thought I would start on this forum.
Again, we are not "feeling the waters" as to whether we will lease or sell. We intend to sell the property. There is a major with money behind them who has already contacted us with an offer to lease it, so this is not a pump and dump deal on our part. They've seen an opportunity and they intend to explore. I want to arrive at a fair price for the property, because they (as well as others yet unknown) are willing to buy it.
Thank you again, and I will be contacting you this week. Please PM me if you'd like to talk.
This will be an interesting auction for you to watch, 300 NMA for sale not far from you:
http://www.energynet.com/property_information.pl?prop=82121