I was asked about selling some minerals in Blaine County, Section 36 - 13N - 12W. The offer was very competitive. It was last leased in '79. Is there a play going on in Blaine that I am unaware of?
There is extensive leasing in that township in the last 24 months. Devon is drilling two horizontal wells just to the north of you in 23 & 26 for the Mississippian and Woodford.
First offers to buy are usually low to see who will bite. The sections are usually spaced at 640 acres, so you may end up getting not only the first well, but subsequent infill horizontal wells. Even small acreage can add up.
Most offers are for use a formula that includes revenue for three to five years discounted for the time value of money. Horizontal wells can be online for decades, so that is a factor to consider. The buyers plan to make a profit off of you. Do you want income for many years or a certain amount up front?
You may be subject to capital gains tax depending upon your federal tax percentage (they never tell you that.) If you have successful wells, then you have federal and state taxes offset somewhat by depletion credits.
Our family waits these sorts of offers out. We have made significantly more on royalties than we would have made on an offer. We have a long game in mind. If one shale reservoir works, then there may be others in the future.
Thank you for your continual insights and forethought.
Just my opinion, but I wouldn’t sell squat! There’s a reason they’re knocking on your door - they know if they can tempt you with a fat check now, they can reap untold riches for years. I’ve lost count of those offers, all those tell me is HANG ONTO MY RIGHTS!!! I’m getting very small dividends from 10 old shallow vertical wells, why would so many companies want to buy my rights? Well now things are happening about a new oil pool found deeper under these wells, combining these two sections, and drilling a new, 7500ft horizontal well into it. Hmmm, what might the future bring with these old wells? Operating wells that already have the permits and surface details in place, and might possibly get reworked to tap this new pool down deeper? I wonder why everyone wants my mineral rights…
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If the new wells are horizontal wells, they will not usually use the current wells as they keep operating ones online as long as economic. Horizontal wells may be deeper and usually need different types of casing with a larger diameter due to additional casing strings needed to get to the deeper zones,
Is there any activity in the Eagle City area? We have some land we would be interested in leasing.
We need the section, township and range.
I own there as well and I get offers to buy all the time. Validus is proposing multiple infill wells on our land. There will be action in the area soon.
21.17.13
Not interested in selling. Only leasing.
The only current leasing I see if for from Woodward Iodine just to the north of you. Time will tell if they move a bit south.
Thank you!