I am writing because I have been solicited to sell my mineral rights in Montrail County. I only have a few acres in section 11 and 12. I know a well is being drilled and is currently listed as confidential. I have been offered 3,500 per acre. Does anyone know if wells in this area are considered large producers. I wonder if I might be foolish to sell.
Thanks,
Old Ent
Look up the well area at this site and see what the local wells are producing: https://www.dmr.nd.gov/OaGIMS/viewer.htm
Can you give the full legal description ? There are sections 11 - 12 in the many townships of Mountrail county. Are you leased ? I think lease then sell is a poor strategy and I would wait to see what the well does and collect the first (hopefully) big check before deciding to sell if at all possible. Someone could be buying your acres from you for the amount of royalty you would receive in a year, and then they could collect the royalty from then til the well ceases production as pure profit. There is also the matter of follow on wells, it takes more than one well to drain a spacing. Also if you are going to sell, I would want everyone on the planet to know what you are selling, nothing drives a price up like competition. Looking forward to your next post.
Good answer!
Township 157 Range 94
thanks for the response. What about selling royalties?
r w kennedy said:
Can you give the full legal description ? There are sections 11 - 12 in the many townships of Mountrail county. Are you leased ? I think lease then sell is a poor strategy and I would wait to see what the well does and collect the first (hopefully) big check before deciding to sell if at all possible. Someone could be buying your acres from you for the amount of royalty you would receive in a year, and then they could collect the royalty from then til the well ceases production as pure profit. There is also the matter of follow on wells, it takes more than one well to drain a spacing. Also if you are going to sell, I would want everyone on the planet to know what you are selling, nothing drives a price up like competition. Looking forward to your next post.
Thanks Ent, the production around you looks profitable but not wildly so. I think it was good enough that they made you an offer based on what they think it will pay in 5 years even if no other wells are drilled beyond the one permitted. I actually think according to the way things are done that it is a reasonable offer. I think it would pay you much more in the long term to keep it, but if you had an immediate use for the money, like paying down credit cards or something to get rid of crippling interest payments, I could see where selling can benefit you now, and not have to wait for a well to come in and some years of production to accumulate. If you do have time to wait for the money to accumulate and another well to be drilled, to add to it, I would keep it. It's possible you could get a well, collect the first couple of largest checks and then sell your acres. In my opinion those who want to buy your acres think there is a good chance they will get half of their money back in the first year of production. I would calculate that into the sale price. It may be possible to sell your royalty stream for a set period of time. I think that may be a more attractive alternative, you will have to have a well first, but you would still be paid royalty on subsequent wells, if the contract is done properly. Everyone discounts the value of what they want to buy from you, it's only natural because they intend to make money off what they buy. I think their offer is within reason, only you can decide if it's in your best interest.
Thank you for the comments. I will consider carefully.
r w kennedy said:
Thanks Ent, the production around you looks profitable but not wildly so. I think it was good enough that they made you an offer based on what they think it will pay in 5 years even if no other wells are drilled beyond the one permitted. I actually think according to the way things are done that it is a reasonable offer. I think it would pay you much more in the long term to keep it, but if you had an immediate use for the money, like paying down credit cards or something to get rid of crippling interest payments, I could see where selling can benefit you now, and not have to wait for a well to come in and some years of production to accumulate. If you do have time to wait for the money to accumulate and another well to be drilled, to add to it, I would keep it. It's possible you could get a well, collect the first couple of largest checks and then sell your acres. In my opinion those who want to buy your acres think there is a good chance they will get half of their money back in the first year of production. I would calculate that into the sale price. It may be possible to sell your royalty stream for a set period of time. I think that may be a more attractive alternative, you will have to have a well first, but you would still be paid royalty on subsequent wells, if the contract is done properly. Everyone discounts the value of what they want to buy from you, it's only natural because they intend to make money off what they buy. I think their offer is within reason, only you can decide if it's in your best interest.