Mountrail county mineral acres

My mother owns 50 mineral acres in Mountrail county, section 29 and section 33, township 156 North Range 94 west. She has been approached to sell them and is in the process. These mineral acres were set up in an estate … so each of us siblings need to sign off on the purchase. I’m having a real hard time doing just that! She was offered $4320 per mineral acre… so $216,000 total. My question is this… is it worth me buying the mineral acres out right from my Mom? This is pretty big investment… will I ever see a profit from these acres? My mom was only receiving $170 a month from Hess … so I understand why it’s better for her to sell at her age… and I am 50. Do you think the value of these acres will ever exceed the $4320 price or ever a chance of them drilling more on these 2 sections? I only have a couple days before I need to sign and return purchase agreement. Please help me know if this would be a good investment to buy them or if it’s too risky . Thank you for any help

In my humble opinion I would certainly make that investment. Our family has 186 nma if they are making and receive $160 a month and have been offered $2 million. If someone is making that offer they plan on making money why not you?

I will play the opposite side…have you considered the risks associated with this “big investment”? At present, the vast majority of mineral buyers are funded, directly or indirectly, by massive pools of institutional investment money (think Canadian Public Pension fund). They have computed the risk and are willing to pay a nice sum for the future cash flow that will come once the property is drilled again.

Some risks to consider 1) when will the current operator come back to drill this area again? 2) do you want to forgo other investment opportunities (opportunity cost) that will create wealth that can be compounded between now and the time additional drilling commences 3) have you researched the company who has proposed to buy these minerals? A lot of brokers in this business trying to make a quick buck on the flip to one of the institutional investors I mentioned earlier.

A couple recommendations if you think you’re not getting the best deal. 1) get more bids 2) you should be able to convey the portion of the minerals that you are entitled to from the trust/estate into your individual ownership.

Hope this helps

Their offer correlates to about a 1,270 month payout or about 106 year payout. The wells that your mother owns in were drilled between 2007 and 2009 which was relative early in the shale boom for the Bakken region. Since Hess only drilled one well in each of these sections, there is theoretically room to drill up to 12 or more wells which would lower your payback period tremendously and eventually make this investment profitable. The key risk involved in this investment is not the price of oil but if Hess decides to come back and drill more wells in your sections. That is the only way to for this investment to have any chance of becoming profitable. From their corporate presentations, they claim to have over a 100 years worth of drilling locations. May have reiterated some stuff that Craig_1294 said but hope this helps from a financial perspective of the risk involved with the purchase.

http://azure.hess.com/docs/default-source/Investor-Decks/2018-barclays-ceo-energy-power-conference---final.pdf?status=Temp&sfvrsn=0.39530881300960985

This is the recent Hess presentation on their plans for the Bakken. Take a look at p 16-20. I would have to look closer, but I think you are just between the Tioga and Hawkeye areas. They plan to increase their rig count from four to six rigs in 2H18 for the Bakken.

Another thing to consider is that you would not have to pay her all the money at one time. You could pay her over a three-five year time period. Easier for you, less tax consequences for her. The Bakken is starting to heat up again now that more pipeline capacity is coming in and the prices are higher.

Given the amount of infill drilling that is all around you, your sections are ripe for more drilling. Any time someone offers to buy from me, they know something I do not know and I try to find out. They will make a profit and I would rather have it instead.

Section 30 and 31 share six wells. Section 16 & 21 share eight wells. Sec 34 has two wells, Sec 26& 35 have about eight wells.

Our acreage in ND slowed down for a while during the price downturn, but I am seeing an uptick now. The newer wells have much better technology with more efficient fracs and are getting better deliveries.

You might want to consult an estate planning attorney. It may be to your mom’s estate advantage to hang on and then transfer the assets to the children at death through her will. The value step up could be advantageous for the children. Don’t let them rush you.

I am also in the “keep the minerals in the family” camp most of the time unless there is a huge need to sell.

I have received three letters from Nichole Larsen (Pledge Resources). On May 4 she offered $12000. On July 19 she offered $20000. On Oct 22 she offered $32000 for my mineral rights - T156N Range 91W section 08, 17, 18. T156N Range 92W section 25, 35. Obviously she “knows something.” Are there some new wells being drilled? How would i get more bids? I have always agreed with “keep the minerals in the family” but seems like we could be further ahead at some point by selling and putting the money in an investment fund where i know i can get 4.5% interest. Any thoughts?

Another thing to consider is whether or not they would be drilling down to another Shale or formation. And it does it depends on the lease that was signed with your mother. Does house own all of the formations since they’ve held it by Drilling and production do they have all of the minerals now to the Center of the Earth or what does her lease actually say? That’s a very important thing to look into. I am pretty sure there’s going to be more layers of formations for them to drill to least there are in Canada where I am.