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.