Leasing and buying questions


#1

I have a couple of questions about mineral rights. We have leased our mineral rights for 18% with a signing bonus …but now we are receiving offers to buy our lease for $100,000. We have 5 acres in Berthoud,CO. (Weld County Colorado) The paper work says Enright 5 well, Enright 7, and Enright 9. My questions are, has anyone ever received an offer on already leased mineral rights? What are the chances that the royalties will be higher than $100,000? And if I decide to keep the lease when can I expect to see royalty checks to begin? And what are the chances that they have found gas? I see the fracking has begun and there are pipe lines going on and several pads around the are. Any information would be greatly appreciated!


#2

There are a number of companies out there currently buying both leased and unleased mineral interests. They have their own way of trying to value the leased mineral interest by finding the present value of currently proposed (and sometimes future) activity on the lands. Generally, the answer is that you will receive more in royalties over a longer period of time than you will make upfront from selling your interest - obviously, or why would they want to buy your interest. However, there is a lot of private equity money going into buying mineral rights in areas like Weld County, which has made prices skyrocket.

When you receive royalty checks will depend on when actual drilling occurs. You can look up the drilling activity on the Colorado Oil & Gas Commission’s website or try to find a landman or attorney to help you do that.

Dave