Dear Miss Patricia,
Carrera Energy has filed a pooling application for sections 29 and 32. They want to drill a multi-unit horizontal well.
Dear Mr Margerum, what is the township and range?
Orren, We just had a similar conversation with our attorney and accountant. Passing on third party comment-if there are no records, then the IRS counts the basis as zero and you will have capital gains on all of it.
If you had a probate hearing or a sale or a gift, then there should be records. If not, then the IRS wants a nice big cut!
Talk to your own attorney and accountant. Probate taxes are one set of taxes, but regular income taxes are separate.
I agree, leasing might be a much better idea. Especially considering that offers are for $20,000 / ac just two sections away from you. See the comment on 8-15N-12W above. Stephen is quite knowledgeable. Friend him or myself and we can give you more information.
Read the investor presentations for 2016 from Newfield, Marathon, Continental Resources, Devon, Cimarex to see what is going on.
Dear Mr Pollock, from what you have written, i guess that you have been contacted by McLinn Land Services. I think that they are leasing for Charter Oak but I am not certain. I donât know if Cimarex is still interested in this area but Echo Energy is taking leases and Echo Minerals is buying minerals. You and your relatives might consider leasing your interest rather than selling. You should be able to get several offers if you want to do something now. Send me a friend request if you want more information.
An independent gas resource company (LLC) showed me that I probably owned mineral rights (3.333 net acres) in Blaine County Sec. 1 15N 13W through inheritance from my now-deceased motherâs first husbandâs long forgotten investment in 1938. Neither of my two siblings knew of the mineral deed, and combined we hold a total of 10 net acres. The LLC first offered $3000/net acre last spring and recently upped it to $4000/net acre. The LLC quoted about $4000 for the cost of validating our claims. They said the title was out of date and as time passes the validation might become very difficult. My limited map research shows the area to be on the NW edge of active drilling. I asked for an offer from Aspen Grove Royalty Co. Does anyone have any advice for proceeding with a sale now, or reasons why these offers are too low for this property, or on any of the comments of the bidding LLC??? (I donât need cash, nor headaches.)
JW,
So, I recently made a post that I thought an offer was low, and that I could make an offer through a private message or private email if a person was interested. My post was then deleted.
I donât see a difference between what I did verse a person recommending a company to sell their mineral too and to private message them for more details.
JW,
I sent you a friend request if you want to discuss in private.
Thank you,
Mr. Pollock:
Values have definitely increased over time in this part of Blaine County. Numerous positive wells in the last few weeks/months have increased optimism and values. What we know as of the last 2 weeks is that Cimarex has filed an intent to drill in your section, and that certainly bodes well for the value of your property. There is also a pooling cause for this section. Unfortunately, there are no individuals listed on this cause. Unless Cimarex has missed something, this may mean that you are the owner of a non-participating royalty, if indeed you own anything. If that is the case, you are not leasable, and you would be subject to the lease terms of a third party.
BTW, those of you making solicitation offers via this forum will have your posts deleted.
Just a friendly reminder of the policy on this board. There are numerous violations, some more blatant others, and enforcement is not always equal. Nonetheless, here it is:
Commercial solicitation and any form of spam is prohibited. Any advertisement, indirect reference to you or your companyâs services, or offer of any product or service will be a violation of this policy. This includes adding company names to forum signatures. Forum signatures are limited to name and simple title (e.g. Attorney, CPA, Landman, CPL, RPL, CFP, etc.) Offering to BUY or SELL mineral interests within the forums, groups and wall postings is not allowed and is a direct violation of the User Policy. Any breach of this rule will subject the member to suspension without notice or further explanation. If you have minerals to buy or sell, this is provided for at the Mineral Rights Forum MarketPlace only.
In the quarterly reports, if you are lucky, the operators give a generic price structure for the realized actual revenue which is usually below Cushing WTI and Henry Hub. Some operators are much better than others at getting good contracts. (One reason I watch those liusts when I am considering leasing-I avoid some high cost/low revenue operators). What you actually get on the sales date is quite complicated due to many factors which you canât control such as sales contracts, sulphur content, etc., etc.
Thank you Mr.'s Barnes and Weeks for offering help in refining my estimates. I will friend you to continue. Thanks again.
I am seeking confirmation by others on estimating the present value of a potential royalty stream of property within the Stack in Blaine County. I began with an XY graph published recently in 2016 by Continental Resources of âBoe/dayâ as a function of âProducing monthsâ which was labeled as âType curve 1700MBoe EURâ. Assuming an initial production within the range reported for Stack wells and using the published decline curve, I estimated the volume of production out five years. For simplicity I then assumed $50/Boe, a reduction in the payable royalties of 20% to reflect operating costs, and a present value discount rate of 5% per year. Am I on track or does anyone have a more accurate or conventional method of calculating the value? Also, my five year volume estimate was about one-half of the 1700 MBoe EUR (expected ultimate recovery) printed in the title of the decline graph. Does anyone know why the 1700 figure is more correct than my estimate, such as they might be taking the recovery estimate out many more years? Any help would be very appreciated!
Also, note that the published curves are in BOE which is bbls of oil equivalent. Not pure oil, in fact, mostly gas with condensate, so you have to separate the oil and gas out by volume and price. Also, EUR is Estimated Ultimate recoverable which is over the life of the well which may be for 30 years. The first four years usually produces the majority of the reserves, but your operating costs and much lower revenue may go on for decades.
You should calculate your return in your specific tract according to the wells in your area, not the sweetest part (unless you are in it).
You need to factor in the changing state taxes as Stephen mentioned and you need to put in your own income tax. Also, read your lease. If you have any post production costs being taken out, you will get a whole lot less in net revenue than you had hoped. For example, I have acreage in Blaine with NO deductions period. The check stubâs post production costs for the operator are running from 50-80% which I am not paying, but a whole bunch of other minerals are because they allowed them in their lease.
I have developed a spreadsheet similar to what you are looking for. Friend me if you want to give it a try. It is for ball park purposes only, but is quite enlightening.
Excellent point about boe. When you sell the production, you will be selling oil, gas, condensate, plant products (from the gas plant) or some combination of these. You need to estimate how the rates of each breakdown and what price you can get for the products. I have some oil production in South Mississippi and the oil price we get is about half the WTI price.
Has anyone had experience with the Newfield Clause on no deductions, where the only apparent add-in is that the royalty owner will be subject to any taxes due ?
Dear Mr Pollock, I can think of several factors that you need to consider. The range of outcomes is quite wide compared to the nice type curve. The shape of the type curve is generally OK but if you look at thousands actual decline curves then you know that the type curve is a generalization that might only be true on average if you drill dozens or even hundreds of wells. Also, you simplification on operating costs will lead you to vastly overestimate the net cash flow of later years. Operating costs for horizontal wells tends to be high and not decline as production declines. Workover costs should be considered, too. You can imagine the profitability being squeezed as revenues decline and operating cost do not. As a minor point, production taxes go up as a percent in later years after an initial period of lower taxes as an incentive to drill more wells. You can send me a friend request if you would like to discuss it.
Still trying to find out where a very very small fraction of a mineral right came from. It should be Section 26 T 19N R13W. It was handed down to the Coffey/Fipps side thru my mother in law Berniece Coffey Collyar. I know there are Robisons that were a relative to her in Watonga I believe. She has died and so is my late husband. We did probate her will in Garfield county because of a larger tract but just recorded this in Blaine County. There is even a smaller portion in Dewey County.
If you have NO deductions whatsoever in your lease, then operating costs are borne by the operator, not you. If you do have post production costs, then they can be significant and 20% isnât probably even in the ballpark of what they will take out of your royalties.
The other thing you need to consider is not just one well, but the potential for multiple wells which my spreadsheet does. I do not have the time value of money in mine (for now) because I think prices will gradually rise over the next couple of years as the supply and demand curves begin to balance out.
BE very careful to read that clause. Any taxes due are fine. They are normally your responsibility. Most companies take them out before royalties are paid. But watch out for the end of the clause that may come after the word âhoweverâ and then it may state that your will be responsible for for your proportionate part of ⌠enhanced valueâŚ
Donât accept any post production costs in my opinion.