I own mineral rights in Martin county Section 42, Block 34, Township 3. I know that there are Horizontal wells being drilled in the area. Does anyone know what the Net Mineral Acre is selling for in that area?
looks to me as if it is settling at about $17,500 per net mineral acres. Offers this year have been as much as 35% higher than that but latest offers i see are about this.
i would ask you what minerals can you buy with proceeds you might receive and don’t forget taxes.
Mr Archer,
Thank you for the response. I’m not sure what the question is that your are asking about (what minerals can you buy with the proceeds)
my comment was simply to point out that it is very difficult to acquire minerals and if you sell and decide you want to buy a similar interest, what will it cost you . when you factor in the tax you will have to pay and the difficulty of replacing the asset, hard to justify selling but each person has wants and needs.
as my father in law used to say, “don’t kill the goose that lays the golden eggs.”
I understand what you are saying, only in my case I have no heirs. I might as well have a nice retirement and have money for elderly care.
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There are some really good SM Energy horizontal wells not too far from that section to the east. In fact, SM Energy appears to be the operator of some wells in that section you named; Are your minerals under an SM Energy lease? That would help your value.
Marcus, Thank you for replying. Yes we have two wells and both are SM Energy Wells. I have not contacted SM Energy to see if they would be interested in buying the mineral rights. Do you think I should?
You could definitely try that. Their interest will likely depend on how many net acres you own. I tried this a couple of times and one time was told my interest was so small they didn’t care to mess with it; Another time with another operator they jumped all over it and paid a much better price than anyone else was offering.
I think I would reach out to the operator and see what they will pay for your interest. they likely know everything any other party knows and they very likely could pay more.
Thank you Mr Archer
I sent them a messag this morning have not heard back. I will call them now.
May I ask how you determined this value? And is that the average price for most of Martin County? I own in Section 30, Blk. 36 Thank you!
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PMower,
I would say that one cannot use an average price per acre across the county as it doesn’t factor the most important value drivers. All mineral acres are not created equal and value is really established based on the following;
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Lease Royalty- What royalty rate is the current lease.
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Rock Quality- this is really a geography question as rock quality throughout the basin has been established for the most part.
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Operator- How many rigs does the operator have running in the Basin/County/general area?
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Production/Permits- Does said minerals have current monthly cash flow (how much) and are there permits that can expected to be drilled or brought online in the near term?
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Drill Ready- Does the operator control offset sections in order to drill at least 1.5 mile laterals?
These are the main value drivers for mineral valuations.
This valuation should be done by a qualifed Petroleum Engineer. All the big oil companies base their decision to buy/lease minerals from the PE’s report. I’ve learned my lesson from dealing with shady brokers who are offering unfair prices for NMA & NRA so they can turn around and sell them for 30-40% more. If you have a reptuable broker market your minerals they will go directly to highly funded oil companies thus cutting out several of the middle men befor an Oil co finally gets it. For a couple thousand dollars to hire a PE, it could make the difference in 1 mil vs 2mil offer.