I recently inherited 200-acres of a 400-acre plot of land in Douglas County, CO. The full 400-acres is currently under a 5-year mineral rights lease that my grandmother signed 3 years ago. I have a gentleman who wants to purchase 40-acres from me. In our original agreement, I was going to keep the mineral rights, but recently he asked me to include them. His main reasoning for doing so are because ultimately he would like to eventually exclude his part of the land from the lease when it expires and if the company would like to renew the lease. He would also like me to include the mineral rights because he would like to receive the benefits if they ever were to drill. I totally understand both reasons, as they are completely legitimate.
However, he does not want me to change the agreed upon price per acre. I believe I am giving him a fair deal already, as I will potentially benefit from him building on the land. My 200-acres is totally undeveloped and he would provide a driveway from the county road throughout the land and would pull electric to the area, as well. Those two things make it easier if I ever wanted to build down there in the future.
I don't want this to be a deal breaker, but I also want to make sure I am making a good deal. As of now there are no permits for drilling in the county, so it may be a moot point. What I am seeking is advice on how much this changes the value of the land? If it is like $100 per acre, then I am planning on asking him to cover all surveying and legal fees and calling it good. However, if it is like $1000 acre, then we need to think of another agreement.
Thank you in advance for your assistance!!!!!
I would never sell mineral rights-never. I learned a valuable lesson on that from minerals my grandfather and dad passed on down to me and my siblings. 10-6 years ago, oil drilling in western North Dakota was very slow. I decided to sell my share to an oil company, but one of my sister's decided she wanted them instead, so foolishly I sold them to her at the same price the oil Co was gong to pay me. Within a year oil companies were leasing minerals left and right. I was very heartbroken that I sold mine. I have a very good sister and she sold me my minerals back with a little profit. I thank God every day that I was fortunate enough to get my minerals back as we now have 5 wells with at least 10 more coming in the near future. Keep your minerals, you never know what will happen in the future. People just never let minerals go with the land and the person buying your land knows this-
Not true at all. Minerals or a fractional share thereof are let go with the land on a daily basis. If people just never let minerals go with the land, there would really be no use for the landman profession. All oil companies would have to do in that case is lease off the tax rolls. If anyone tried to do that exclusively, there would be a hell of a lot of bad leases.
Ardis and Dave,
Thank you both for chiming in! Ardis makes a good point, so Dave, do you think i should include the mineral rights, and if so, what is a fair value?
Thanks,
Charles
Dave Quincy said:
Not true at all. Minerals or a fractional share thereof are let go with the land on a daily basis. If people just never let minerals go with the land, there would really be no use for the landman profession. All oil companies would have to do in that case is lease off the tax rolls. If anyone tried to do that exclusively, there would be a hell of a lot of bad leases.
I would do one of the following:
1) A card laid is a card played. If that was the original agreement - no minerals -, I would tell him tough oats, and sell surface only.
2) Use it as a bargaining point, and put the ball in his court. Ask him how much more he would be willing to pay you for min. rights. Then, do some checking with more local sources, and ask them whether you should accept his offer, or whether you should counter. Sorry, but I don't have a figure for you, but I can see your point that the land may be worth more if they are included.
Thanks, Dave!
This morning I had a wonderful conversation with a gentleman who lives in my area and is familiar with the circumstances. After talking to him and reading the responses, I am going to hold onto the minerals. It will probably never come into play, but just feel better about my decision than I did 24-hours ago.
Thanks for your thoughts and am always open to more!
Charles
Charles, I am glad you are keeping your minerals, one never knows what will happen in the future with the oil in Colorado. I know of no one in my home state of North Dakota who has ever sold the minerals with the land. If I could have, I would have purchased some. 20 years ago, you could hardly give minerals away, now it has all changed. Good luck to you, hope you get some oil wells.
Dear Mr. Kastens,
The highest reported bonus in Douglas County, Colorado in the Sept-Oct 2013 time frame was appx $2300 per acre.
Buddy Cotten
Thanks, Buddy! I think it is best to hang onto them for now.
Charles
Buddy Cotten said:
Dear Mr. Kastens,
The highest reported bonus in Douglas County, Colorado in the Sept-Oct 2013 time frame was appx $2300 per acre.
Buddy Cotten
Mineral Manager