How could we calculate the future value of this well if we decided to sell mineral rights? Thank you!
That is the Holy Grail of the oil patch: the successful buyers long term have steep discounts because there are so many variables. Mechanical risk, market value risk, time value of money risk; and yes, even geologic risk.
You could look at the Wiley production and try to ballpark something. There has been a lot of interest in the area over the last few weeks.
Hello Laura, Just got a call today from an oil & gas company out of Oklahoma City. The offer was almost double from the last company we got about 3 weeks ago for the purchase of our mineral rights.
The value of your interest in one well should be less than the value for all of your minerals in the Section. For the value of your minerals, you have to add the risk of new drilling operations. As a mineral buyer, if I can purchase your minerals for the present value of your interest in one well—that is a good investment for me. I get all of the future “up-side” in the Section paid for by the production from the existing well.
Those sections are in a Woodford condensate area. Continental has been active in there. Think larger than just one well. Think of the possibilities of more than one well. At the moment, there is a permit for the middle of section 27 heading west into section 28. That well would hold both sections. Faulting in the area may determine how many more wells might be drilled.
Did not know of this possibility. Thank you for your help & reply!