Ive recieved an offer to buy my royalties in the barnett shale I currently own 1/3 acre mineral rights to a property i sold a few years back. The offer was from addax minerals out of dallas tx. They offered me 4200 and i told them to come up and he replied at 4500. My questions are 1 is this a good offer 2 should i ask for more and 3 should i even sell??? I have been recieving around 100$ every two or three months in royalties. There are 7 wells producing in our pool
Please do your homework on this company. They offered me as well and I informed them the offer(s) were way to low.
With 7 wells producing my personal belief is that the offer is too low. If there were only 1 or 2 wells, I think it would be an average offer. Without seeing the production numbers its hard to tell. $100 every two or three months is less than I get from a single well in the Barnett shale though. Based on the income alone, I have received slightly lesser offers for my royalties in the Barnett.
See, I respectively disagree with what you're saying Kitchen and think the opposite. For starters, obviously the decimal interest is small on the 7 wells and I haven't seen the unit that Mr. Taylor is included in. But the fact that there are 7 wells and not 1 or 2 likely means that this unit is drilled out on the smallest possible spacing, therefore there is no future room for additional wells, thus additional royalties. If there were 1 or 2 wells, I might think, "Maybe they could drill 7 wells and your checks would be 3.5-7 times bigger." But if 7 wells is all that will be drilled, Mr. Taylor's royalties will likely keep decreasing over time with the exception of a rise in natural gas prices.
Receiving "around 100$ every two or three months in royalties" that would conservatively high give us $50/month in royalties. A $4,500 offer would be a 90 month payout. That's pretty darn high for Barnett Shale wells! Especially if the unit has, in fact, been drilled out on the tightest possible spacing. That would put the true payout at well above 90 months.
Taking all this at face value with no more information to go by, I'd have to say this seems to be a pretty decent offer and I would personally be thinking about taking it, or at least doing a little more homework on the offer. However, I know nothing about Addax Minerals, so you would definitely want to do a little due diligence as Mr. Pauly mentioned.
Best of luck!
Is the $4500 a per acre price, or is it the total purchase price of your 1/3 of an acre?
The 4500 is just for my 1/3 acre. I appreciate all ur responses. Ive been trying to gather as much info as i can before i make my decision.
Texas Tea, one thing I did not mention is that I have an opinion and an assumption that some wells in the Barnett shale are not producing at their full capability by the choice of the operator due to low gas prices. While I don't have evidence to prove my point, I still believe that some operators here are intentionally not producing at full capability in order to preserve some of the well life for when gas prices may rise in the future. If gas was $13/mcf I think we would see a lot more stimulation and re-working of some wells to maximize production. Again, this is all just an opinion of mine.
At the same time, why is Addax minerals bidding for 90 months of (projected) income? That seems to be a much longer return on investment period than offers I am used to seeing (mostly on this forum). To me it means one of three things 1. Anticipation of the price of gas rising in the future to pay off investment in less than 90 months and/or 2. Additional wells being drilled in unit and/or 3.additional stimulation potential for existing wells to increase production.
I would go to $5000 and sell if they take it....