will probably be worked for 20 years. Never have done this on a computer before so please excuse the mistakes.
Virginia - there is a well drilled and possibly already producing on your section. It may take some time to get that much money from royalties but you will likely get that and much more in the long run. There will also likely be more wells in the future. That is a very good area for oil and gas production.
Virginia, the Goff 1-15-10XH was spud back in September 2013. I am sure in about a year that you will start to get royalties from this well. We have six well in sec 12 and 13 3N 5W an are doing quite well. I am sure there are others with more knowledge that will chime in here with more info. My advise...lease your acres but do not sell.
API No.: 051-23714-00
Spud Date: September 20, 2013
Operator Name: CONTINENTAL RESOURCES INC Operator Number: 3186
Address:
OPERATOR
Well
Name/No. GOFF 1-15-10XH
Sec: 15 TWP: 3N RGE: 5W County: GRADY
Ms. Lee, I think it likely you would see a substantial amount of money from your well but it may take a few years before you see $8,500 per acre in royalty, but if you sell you and your heirs could miss out on the royalty from several wells which could be over $10,000 per acre per well, eventually. I would at least wait for the first big check with several months royalty on it before considering a sale, you may not want or need to sell after that. There is also the matter of future wells from which you and your heirs would receive nothing. Collecting the first couple checks does not seem to hurt the sale price of minerals. I just received a buy offer for my minerals of $8,500 per acre and they have been producing for 5 years.
15% Capital gains tax probably will also apply in a sale. $8,500 X 5 acres = $42,500 X 0.85 = $36,125 or an actual $7,225 dollars per acre in your pocket after taxes. So for a sale it's -15%, but if you keep it and collect royalty, you get a 15% of the gross DEDUCTION from your federal taxes for the gross royalty you attributed to your acres, so really you would not have to hold the acres so long to receive the same amount of money.
It does take some faith and patience. The buyer evidently has faith or they would not be offering $8,500.
We have a small family corporation which owns producing minerals within Grady County. We were recently offered $8,000.00 per net mineral acre. Though the sale price would have generated a substantial amount of money on a gross basis, we would have gotten beat up badly on capital gains and state taxes within the corporation of ours. Then going forward, if we were to make a distribution to the family, each person would have had additional taxes associated with the income. I would consult with your CPA, before ever selling minerals. We have decided not to sell and make due with the production income. I believe the reply from Mr. Kennedy is right on.
THANK ALL OF YOU FOR REPLYING TO MY QUESTION OF SELLING THE MINERAL RIGHTS FOR THE TERM OF MY 3 YEAR CONTRACT. THAT WAS NICE OF YOU TO TAKE TIME FOR A STRANGER! VIRGINIA AKINS