My family owns mineral rights on about 160 acres of land in Converse County, Wyoming. The land has been split among several generations, so I and my siblings each own royalties on 3 acres. We have been getting royalties of about $50 per year from Shell Oil. Within the last couple of years, Anadarko has submitted applications to drill up to 24 horizontal wells in the Niobrara formation and up to 8 horizontal wells in the Turner formation on our family property.
In the last six weeks, we have received two offers to purchase the entire acreage of our family property. One from Lincoln for $3250 an acre and one from Anadarko/MPH/ Upland Energy for $4250 an acre.
My siblings and I are new to the oil exploration market and don't have the knowledge to assess whether this is a fair offer, or whether this is good time to sell. (We can each make our own decision for our acreage.) I have tried to research mineral exploration in Converse County and in the Niobrara and Turner formations, and it appears that there has been some promising recent discoveries. I was especially interested in this chart from December 1,2017 that shows that 6 of the 12 top IP wells in the Niobrara formation are in Converse County, Wyoming:
http://oilshalegas.com/niobrarashale.html
I and my siblings would appreciate any advice anyone has to offer on whether the offer is a fair price and the wisdom of selling the rights on land in this area at this particular time. Is oil exploration promising enough in this area that it would make financial sense to hold onto the rights?
Hi Janet,
Without knowing the particulars (exact location, etc.) it is hard to say. It is likely that you could get more for your minerals if you and your siblings joined together as one group (e.g. someone who owns 15 net mineral acres has more bargaining power than someone who only owns 3). If Anadarko has recently permitted wells then it is a promising sign as to the interest level around your property. If you can wait it out, then it may be worth holding on to your minerals. As you can imagine, the value of your minerals is highly dependent on when wells are drilled and how productive they are. Just because wells are permitted, doesn't necessarily mean that a well will be drilled before the permit expires. It may be that Anadarko wants the option of being the operator in the area and is proactively permitting wells to secure their position. As you probably have seen in your research, IP's sometimes can vary quite a bit and just because big wells were drilled in the county, there can also be significantly lower production just a few townships away.
I'd be happy to give you a quick look and tell you my thoughts if you would like to send me a direct message with info. If you and your siblings are seriously considering selling, I would hire someone to provide a valuation of your minerals to ensure that you are armed with the knowledge of what they are really worth before you enter into negotiations.
Hope this helps!
Thanks,
Matt Sands
Minerals Management
Similar to Matt's response below, I would be happy to go over your acreage with you. The area is seeing a material uptick in interest due to the 'stacked' nature of the formations. Further, recent well results have been positive as operators are utilizing more advance completion techniques and obtaining really good results.
If you want to chat PM me and we can connect - I can send you some maps and greater details as to what's going on in your area.
regards,
Jeff