A family member and I have recently received an offer of $20K per acre for mineral rights in this section. This is over twice anything we've been offered in the past. They are obviously very interested in this region. I assume it is due to the Meramec STACK play covering Canadian, Kingfisher and Blaine counties. We know the general philosophy is to never sell, but looking back at royalties for the last 25-30 years, it's hard to imagine they would increase so significantly that we should turn down the offer. Seems to be quite a gamble as individual owners. Does anyone have any thoughts on this?
The reason you are getting the offers is for the STACK play. A possibility of five stacked reservoirs with multiple wells in each reservoir. Your previous royalties were probably for old vertical wells or a single horizontal well in a deeper gas reservoir. The new wells are in quite prolific oil reservoirs. Read the most recent Q3, Q4 16 investor presentations for Newfield, Continental Resources, Marathon, Cimarex, Devon, etc and you will see examples of the wells, their plans for drilling, etc. $20,000 is low in my opinion.
Cimarex has increased density cause (201700892) before the OCC right now for at least one more well and the reserves listed on the Exhibit imply quite a few more wells in the future.
Friend me if you want to discuss further. I have acreage very close to there and we are keeping ours.
Someone on here said " these guys are smart -- and they are not giving you a good deal because they like you" , " they are going after the best deal for themselves" Unfortunately that the way they want it to work, Keep us owners in the dark so we are not sure when we have a good or bad deal..
You are in a position to bargain. A friend in Blaine Co. said he knows of a sale of $33,000 per acre.
I would have to really really consider the offer. But I might hedge by trying to find other minerals of potential to replace or exchange. I am not sure if 1031 tax exchange can be done on minerals alone. Worth a try.
The economics is being driven by Korean (Devon) and Chinese investors (Cont. R) so if a mineral broker /buyer is offering $20 K you can bet they have a buyer to flip the property to for 20-40% more.
But these booms in a local area don't last forever. And at something over $20K/acre, I have to wonder if it really would "pay out" especially with the way some companies swindle royalty owners with outsized post-production expenses, etc. Lots of people wish they had sold because they haven't made but a fraction what they were offered and it may never "pay out" to the offering price in their lifetime.
Consult your tax man. You may need to check a cost basis for the minerals or pay capital gains on the entire sale. Do consider that.
I have property in Section 20, just below Section 17. The initial offer from BCF was $20K, now increased to $25K. I have similar thoughts regarding the time value of money. How do we find out what they know that we don't?
I have been told that a mineral deed does qualify for a 1031 tax exchange.
Read all of the investor's presentations that you can for all the operators in the area. They will tell you all sorts of things and have maps. Read the OK newspapers online and troll different websites that have info on your area. You can't find out the top secret things, but you can get a good idea of the general trend.
Based on my knowledge of the area, $25K is still too low. Our family is hanging onto every acre we own in Blaine. Some are more valuable than others, but these plays are huge and this is a long time game, not quick one. Stacked reservoirs with thousands of potential wells that will take years to drill. Even more important with the time value of money.
I live in Texas. My grandmothers land has four oil wells on it right now. Question, is there a good chance more oil wells will be drilled on the land you own mineral rights on...or do you sell. My husband owns minerals rights in Canadian County and we have been approached twice to sell them. So we are in the same boat. We haven't even answered the letters or returned the calls. Right now..not interested.