I recently became aware that my family and I have mineral rights in Perry County, Illinois located on an abandoned coal mine (which has tax incentives for solar projects). We were approached by a solar company requesting surface waiver agreements for a minute price. How do we value these mineral rights in negotiations and what is the best route to maximize my family’s profits from a sale? Thanks.
Very curious on your outcome. I had a similar situation in Texas. A solar company wanted mineral rights on nonproducing property but the company would not budge or negotiate on anything. When I told them their offer wouldn’t cover attorney fees to look at the agreement, they made one last attempt. I told them we had nothing to discuss the way the terms were. I haven’t heard back from them anymore.
1 Like
Did they proceed without the waiver? I will keep you informed.
It is for a potential 2000-acre solar farm. I think they have the surface rights locked up but the mineral rights are divided with over 200 parties. I am one of the larger parties of the mineral rights they are seeking. I do not know what the status is on proceeding but I have kept the agreement they sent me. They offered 200.00/acre for mineral rights and didn’t budge off that but were very persistent about closing on an agreement that was very open-ended beneficial for the party wanting me to execute the agreement. I will pass.
They needed about half of the parties with mineral rights to go forward with the project.
That sounds so familiar to my situation. Our mineral rights are splintered as well. They stated they would go if they have half of the mineral rights owners, but we are all family. This is almost identical to our situation. They are not budging but persistent, and I am of the same mind. It appears that utility-grade solar farms profit about $40k per acre per year. This is a fraction of pennies on the dollar. I am wondering if they have surface rights locked up, and I am not sure in our case if they lose that money on the contract.
Was it a company called Birchcreek?
I am not sure if surface rights in my case are locked up, but I think one large party has all the surface rights. Their terms to me were $200.00/acre, 25% down to keep regardless of if it became a solar farm or not, and if they decide to build the farm, the balance would come. There are taxes to be paid to consider because I got that in my agreement package. In my situation, the mineral rights were passed to me by my grandmother, and she would have Texaco and Shell explore for oil on it 40 years ago. It is non-producing and never has had any luck. When I was first contacted about the mineral rights, the lady I spoke to said it took her a while to locate me. Anyway, she sent me an offer via email but I never got an agreement. Then a few months passed and a man called me from the same company with a different offer and recalculated the amount of acreage as well. He told me she no longer worked for the company. I said send me an agreement for me to look over. He did and I looked over it. But the language needs to be negotiated by an attorney, and when I asked for extra money above the $200.00/acre if it became a producing solar farm, that was a no. I asked for something else and that was a no. It was very cordial between us, but it was also hard to find a solar farm attorney who is familiar with agreements. I thought if I am going through this much trouble, if I get an oil and gas attorney, this is more than I am being offered. That pretty much made my decision for me. The mineral rights I have are 6 hours away from me near the Texas Coast. I reached out to my local provider of electricity to get a feel for what mineral rights acreage goes for. The CEO of my provider actually called me at home but was very unfriendly. He told me information like that is confidential, which I understand, but I was just trying to ascertain what a low price was for mineral rights acreage. Anyway, I didn’t expect his help but didn’t expect him to be so customer service unfriendly. This mineral rights board has been the most help. I have had several great suggestions and a few tell me what I was offered is way too low.
1 Like
Thank you so much, that is very helpful.
1 Like
No, not Birchcreek. The company that reached out to me was out of Louisiana.
It seems to me this whole thing is valued incorrectly. The price per acre should not be determined by what the mineral rights are; that is not the commodity we are selling but rather the assurance that if a mineral we have does become valuable in the future, we won’t mine it. There is an accommodation doctrine, but the waiver disallows us that liberty to mine under that doctrine, and if we want to mine our mineral rights, we must do so horizontally. So to me, the value isn’t what we make by the minerals but what they will make in acreage usage if they don’t have to accommodate us. For example, if we have 100 acres of mineral rights and they have to afford us 30 percent to mine, they will lose 30 acres, and at $40k an acre over the course of 40 years, that adds up quickly. It seems to me that as this land gets swallowed up and more scarce and more regulation, it would be more prudent to save the mineral rights until solar companies are going to pony up more so they can get rich. This feels like a robbery.
While the mineral estate is the dominant estate, a Surface Waiver (waiving the mineral owner’s rights to ingress and egress for the purpose of developing their mineral rights) is technically only a formality unless there are active efforts to develop the oil and gas. i.e., if there is no drilling, production or leasing in the area, then the mineral owners cannot say that the surface owner has prevented them from producing their minerals.
1 Like
Yes, that was what was said by the 5th Circuit in Texas in Lyle v Midway. But Lyle said they never intended to mine. Now that we are aware, we do have plans to mine if we don’t sign an agreement.
Be sure and get a good solar attorney to look over any lease. I was just at the NARO TX convention last week and heard two excellent talks about solar leases. They can be quite complex and can last for decades, so very important to get all the clauses that would help your family for years to come.
2 Likes
That is good to know, I appreciate the help. Do you have any ballpark estimate on what a surface waiver for non-producing minerals would be worth to a solar company per acre? It seems that from what I can tell, they profit from 30k to 45k per acre per year.
Have no idea. That is why you would need a good Illinois attorney who specializes in solar and who knows the players.
I talked to the same attorney that argued the Lyle case, and he stated the exact same advice. I am having trouble finding a company that does this solar energy law in Illinois. I could thus far only find a mineral rights attorney that has not done this. My family is not the richest and really trying to see if this is even worth it, just a rough estimate, before going forth. They have offered my family $1,000 for 8 people for 90 acres, and that seems like they are trying to get something for nothing.
I understand. Figuring out the attorney expenses will determine if it is worth it. An attorney is a must for these agreements. I know I only had mineral rights but there has to be some financial benefit after attorney expenses. The company that dealt with me was open to answering any questions. In my agreement there was no end to the agreement but lots of options for the solar company. I was told by their rep the agreement would go to the next generation in time.
Totally wrong! The mineral owners have the right to use the surface. Room must be designated for well sites, easements, roads, power lines, pipelines and on and on. It’s Texas not California. What’s happening with oil and gas in the local area has absolutely nothing to do with it.
You mentioned an abandoned coal mine and that got me to doing some research.
Here is what I found at a high level. The coals and associated shales in the Illinois Basin are an attractive potential gas resource because of their location in relation to major gas markets in St. Louis, Chicago and Indianapolis. The road network, large agricultural base, existing petroleum infrastructure, favorable regulatory bodies, almost 100% fee acreage, and present lack of environmental opposition are factors favoring coalbed methane exploitation in the Illinois Basin.
So, are your mineral rights for the coal or, were they separated from the coal i.e oil and gas? The owners of the coal are owners of the methane. All the more reason to find out exactly what your family owns in the way of rights and what those rights cover. Some forms of CB methane extraction cause the surface to subside. Most of the early interest in CBM centers around the eastern part of Illinois near Indiana.