I need assistance understanding how the value of mineral rights are calculated by prospective buyer of my MR'S. We are receiving numerous offers to purchase our mineral rights at $21,500 pnma. I am not considering selling but am interested in knowledge to negotiate with companies and their offer. I always believe the first offer is the lowest and companies try to pressure you into quick decisions. We have two leases, one shallow, producing and a deep lease just signed in August, 2 different companies.
We are in the Delaware formation which is the hot area, close to the Pecos River, Ward County TX.
I have run my numbers based on offers, potential long range production, estimations of monthly royalty revenue which declines over 20-40 years, etc. 120 years of family ownership.
Any knowledge will be greatly appreciated.
Mike
You are right "the first offer is the lowest."
You may be able to extrapolate (a conclusion based on statistics) by reading past posts on the Forum that may gain you some valuable "historical knowledge" that could satisfy your request.
Good luck,
Pat
time to development
number of formations
number of wells per unit per formation
projection profiles for each well/formation
royalty rate
discount all those factors by desired return
In the Delaware, buyers are anticipating that multiple formations will be developed with multiple wells in each formation in each unit. This assumption leads to a very large amount of production in the forecast, and hence where some buyers get to the value they are offering. Others buyers are more or less throwing out offers to see if anyone will take it, or looking at offers someone else sent and matching it with no real opinion as to why its worth X.
Thanks for info, I think the same.
Mike