I’ve had 3 offers on mineral rights in the last few months since May. Here’s what I’ve been told. First offer said there is a moratorium on the Adams County area and it could be a long time before any additional drilling would happen. They are making an offer on speculation and taking a chance with acquiring said mineral acres. Second company stated pretty much the same thing although a much higher offer. Third company seemed way more forthcoming. They stated that my section indeed did not fall under the moratorium and it has a permit in place on an adjoining property with plans to drill a new horizontal well that will eventually go straight across my mineral rights property. So I have limited knowledge of any of the above and have no idea on what kind of value the royalties would even be. Any help with knowledge on Section 1 Township 1 South Range 68 West in Adams County would be helpful.
Hello Ann - I am very familiar with Colorado. So after the new governor came in, he basically changed the oil and gas laws, for the worst. The people voted against it in November, but he decided to go and do it anyway. So they changed pooling requirements, setbacks, and gave the local government more authority. With this authority, counties like Adams and Boulder put a 6 month freeze on approving any new oil and gas permits. When that expires, if it does, who knows how long or what it will take to get new permits, as they are going to make their own rules and could make it essentially impossible. The reason the one company may say yours isn’t affected is because it has permits on it from before the new law went into effect - grandfathered in. Those are valid until they expire, most likely in 20/21. That is no guarantee they will drill. Companies went on a permitting spree in 2018 in fear the new law would pass, they would be grandfathered in. Now they have plenty to choose from and drill. Assuming they don’t drill, and the permits all expire, your section would then be bound by the new rules, unless they get rid of all this by then. Which I am hoping they do, as it’s hurting not only my mineral values, but others as well. Tons of companies have pulled out of Colorado altogether because of this. I don’t think the liberals in the cities realize how much this will hurt the Colorado economy. A lot of people depending on that money. A lot of families have invested money into mineral rights, that could now be worthless. I am curious to see how this all plays out over the next few years. Weld County is trying to fight this, but Adams County seems to have gone along with it. The people in Denver were trying to say that the wells were giving them asthma, and that’s what has caused all the smog. I don’t know if you have been to Denver, but I can assure you, it’s not the wells. If it was, Weld County would be the same.
Hi Cole, Thank you for your answer. I did get some good news; they are currently drilling in the section (6) right next to my mineral area. From what I understand, their plan is to come toward and under the area I mentioned above. I’m still not sure what it all means. But I am still getting increases in offers and it really makes it hard to pass up selling. Not sure if I should hold or cash in.
You got to weigh the pros and cons.
Can I ask your highest offer? That will be a big factor on if you should even consider it. Also are we talking a few acres or a large chunk?
You need to do the math and make an educated guess on possible money from production vs one-time sale income. Also, how long are you willing to wait? Because if they do not drill your section (plans change constantly in this industry) and you’re bound by the new laws, it could be years until it’s drilled, if at all. So you need to be aware that if this all goes south, the offers you’re seeing now may not come again. We will have to see how these changes go the next few years.
The current offer is 8500 per acre and I have 6.5 acres. They are drilling under the property now. I also found out there are currently 2 wells in question. One is still producing and the other has been capped. It’s all so confusing.
Ok, well make a decision fairly quick. Once you get flush production, your minerals will no longer be worth the higher cost. I haven’t looked at the map, but here’s an example of what money you could be looking at should you keep.
I’m going to assume that it’s a 1280 spacing unit, your minerals are leased at 18.75%, and this well will produce 15,000 a month @ $55 a barrel. Now it could produce more or even less. But that comes to roughly $780 a month in royalty. But, the well will only produce that much for the first few months then drastically decrease before leveling out. You’d probably be looking at $200-$300 a month maybe, after the first 6 months. But like I said, could be more or less depending on spacing and production.
If your property is in the section west of Colorado Blvd and north of 160th (Highway 7), they are going to drill 26 wells; 22 are permitted with 12 have been drilled. Fracking has taken place and oil and gas lines are about done. Some of the wells in this area are producing 15,000 to 20,000 bbls per month of oil each. Do the math and you can see a lot of money can be made if you hold on to your rights.