Hi everyone,
My father was from Salem in Harrison County. We have been approached to sell his mineral rights at $1,600 an acre in the Sardis District. Apparently, this is the set price. A title search had shown that we own the mineral rights and not the leasing rights. Does this sound right? Apparently it is worth $1,600 an acre to them. So why is this the final price? Thanks! Feedback is appreciated!
Sorry! Let me clarify! According to the potential buyer my father owns the royalty rights and not the leasing rights, which is why he will not pay a higher price. Maybe we should sell, but we just don't want to get taken advantage of for not knowing. Thanks!
Brian
Hi Brian, we were surprised with the news that we were "non-participating" royalty owners when we received a division order last year. It sounds like the same thing in your situation. In our case, someone in the family had signed a lease back in the 1960's and something (I assume a well) had been in continuous use on the property keeping the lease active and that meant we were the recipients of the new production from the Antero well. But it also meant we were not eligible to sign a new lease since there was one already active. We only own a small fraction of the mineral rights. Even with our SMALL fraction we received almost as much in dividends in one year as you are being offered per acre to sell them. And this is with an old lease with the minimum 12.5% interest and other poor terms. Unless you are completely strapped for immediate cash, I would hold onto those mineral rights. I think most people on this site would say the same. They have worth.
Now my question, which relates to both of us, and maybe someone else can answer...is if there has been a lease in effect all these years, are we entitled to some back royalty payments? How do I find out? Do I ask Antero since they were the ones who issued the division order? Do I ask someone in the county?
Harrison County online documents
You might be able to find out something searching the above. I haven't used it to know how far back it goes. Worth a few minutes.
A possible way to be the owner of non participating minerals: If someone owns surface and minerals, all rights, and wants to sell the surface and part of the minerals, sometimes the buyer wants the leasing rights so the seller sells surface, maybe 1/2 of the oil and gas rights, and grants the right to lease and collect bonus and rentals but retains rights on 1/2 minerals, and half of the royalties when these are produced and sold.
$1,600/acre seems low to me. I haven't dealt with royalty-only rights, but I wouldn't sell royalty and leasing rights for less than $4000/acre in Harrison. Right now I would expect to sign a lease in the area you're talking about for $2,500/acre or more. The royalties can be a lot more, or a lot less, per year depending on the amount of production and the price of natural gas. That's only for the Marcellus shale. There could be other producible formations down there that become interesting years or decades from now.
If you have a little tiny interest, then selling may not be a bad idea. If you really need the cash, selling is a good option. But if you have anything more than a couple acres you should seriously consider keeping it in the family.