A relative passed away 2 years ago. She left me mineral rights and I am familiar with their actual location, having grown up on or near the land they’re associated with. Since the Apache buyout, still no checks have been issued due to new costs and changes, taxes, etc. I received an offer to buy that I’m considering seriously. My question is two parts:
- If the mineral checks on what I now own were just slightly above 150 per month, what is considered a good sale price? I understand Reeves County is a huge oil and gas area that is still growing in production and wells.
- The sale I am considering would be effective this month, so should I still eventually get at least one check for this previous 2-year period at some point, also? I understand the Apache buyout has delayed the checks for everyone in my family for around a year now.
To properly evaluate any possible sale value for your mineral rights, one has to know a lot more information.
Where are the minerals located? Section, Block, Abstract, etc.
What is the description of the mineral rights? How many acres? 100%? Or less?
Any depth limiations?
It sounds like you had some old production that was kicking off about $150 per month?
How many wells? Present rates?
Biggest question is tied to possible future drilling that would include your minerals - which would dramatically increase your monthly revenues (assuming successful drilling results).
Good chance the reason you are being approached to sell is that you are getting these low monthly checks and the buyer is wanting to pick up your minerals “on the cheap” and take advantage of your not being aware of upside potential.
Remember, mineral buyers are not trying to do you a favor - they are looking to acquire your interests for as low a price as possible so as to best benefits themselves.
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An issue with the transfer of ownership from your relative’s estate to you, or a question about the percent ownership could be interfering with your payments.
Consider hiring an oil and gas attorney to learn about your gift before making any decision. My family and I have confidence in Wade Caldwell, oil and gas attorney, whose firm has helped us for many years.
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I second Wade Caldwell’s firm. We recently sold some of our interests and they were able to shop us around. We received 4 times the highest offer we were given without an attorney.
I don’t know what the value of your mineral rights are at present time. I was getting $150/month for my royalties every month for over 30 years. They have gone up to over $2000/month. Not every area is the same. But, I have always been told to NOT sell. I don’t think you’ll get payment for the 2 yr. period by selling it. Whatever the offer is, it’s probably worth 25% of what it’s really worth. Try to hang on to it if you can. My opinion, I’m not an expert. But I’ve negotiated many leases for my minerals.
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My thought is that you probably want to wait to sell until you start getting checks again. Most buyers will want to know and will value your rights based on production or potential production. So no revenue stream make it more difficult and perhaps at a lower price. Instead of contacting or contracting with individual mineral buyers, there might be two places to start. One is the producer themselves since they should have a very good idea of the value. The other option would be one of the auction houses. Why get offers from 2-3 random people when an auction house might get 100. MCEE is one. Oil and Gas Clearing House is another. There are probably others.