Offer for mineral rights

I own mineral rights in Township 4N Range 67 West Section 9. I have had an offer of $5k per acre. Does this sound reasonable? I do not totally understand the map and the permits. I have had it leased to PDC, but they have recently sold to Chevron. Thank you!

PDC is very reputable and their sale to Chevron shouldn’t change anything. Personally I’d hold onto your mineral rights. I think $5k is low and someone is just fishing. You can go to COGCC Home and look at the GIS (map) of your area. It’ll show any activity what the current production is.

Thank you for your response! I figured the $5k per acre was low, but not sure what is reasonable. I’m at a point in my life where I want to make things easy for my heirs. And really the area has not produced very much royalties for me. I did look at the map and it does look like there maybe two well permits, but I have no idea if they will put a well on them. I could possibly have a small piece if they do. Not sure what I will do.

Hi, Maybe you can offer 50%? John

Hi! I looked at your interests on the COGCC website and as you suggested, there were some wells permitted in 2015 (PDC had permitted 8 horizontal wells) but these were allowed to expire and the surface location permits were also abandoned before anything was drilled. There doesn’t appear to be any active drilling permits now, so it is likely going to be a few years before any additional wells are drilled in Section 9. As such I think $5k an acre sounds reasonable (without running the numbers to tell for sure) given there is not line of sight to any near-term drilling. If you decide to hold on to your interests as Michael suggests then the time when you will see maximum value for them is when new horizontal wells are drilled on your minerals. The only additional comment I have regarding the Chevron/PDC sale is it is possible that it could affect timing of when Chevron drills new wells here but otherwise shouldn’t change much from a mineral owner perspective.

That’s always a tough decision. As a landowner I can understand your thinking. Horizontal drilling is a serious game changing technology. Areas that didn’t have much activity suddenly are very productive. You’re in an area where the growth hasn’t fully developed and the drillers are quickly trying to figure out how to drill and protect their interests against the growth in Weld County. The rules have made it difficult for them but they are adapting and trying to do a larger area through a larger drilling pad. I suspect that’s what will occur in your area. Look at PDC’s Guanella Comprehensive Plan (www. PDCE.com/guanell-cap) which is near your property. These CAPs allow the drillers to enter into a regulatory agreement with the municipalities and state and protect everyone’s interest. I predict a similar CAP for your area.

Thank you for responding to my question, it helps! I still think $5K per acre is low and their first offer, I will probably counter and see what they say. Maybe that is the only true way to find out the value for a novice!

Yes, my mineral rights are right on the edge of Johnstown and there is a business on the surface! Over the last 15 years, I have received very little in Royalties, so thinking now night be the time to get a lump payment. Thank you for your response!

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