I leased my minerals last year in Lynn county and now have received an unsolicited offer to purchase my minerals for $950 an acre. Has anyone heard of other activity like this in Lynn County? If so what was the offer?
Carl Odom
Carl:
Could you provide additional information as to the exact location of your minerals (State, etc.). Myself, as a mineral owner, would advise not to consider the sale of any minerals but that's my personal opinion. You can read additional posts on this forum that dicusses this subject in depth.
Carl, I won't even go into whether you should sell your minerals or not. I will point out that since you have leased them already that you have conveyed 100% of what you owned (with only the possibility of reversion) so now you are in essence selling your royalty stream and a chance at full ownership. In my opinion, you will not get as good a price as unleased acres. What I think you should do is what you think best based on whether you need to sell or are merely considering an opportunity. If it's just an optional opportunity, I personally would wait for the lease to expire, to extract the full amount from a sale. The minerals may appreciate considerably in the time it is leased, and if a well is drilled and you are receiving royalty, your desire to sell may disappear. Be wary of unsolicited offers, many people get them just ahead of a well or the division order for a well. I would investigate to see if there is a well or activity in the area. I, and others frequently receive mass mailing lowball offers to buy our mineral interests, I have never yet seen one I thought was even close to a good deal. Some of these offers come from Dale Resources, Permian Basin Acquisition, Ageis, Bridgeport and so forth. Good luck with your decision.
Carl, I agree with Mr. Kennedy, as I have received offers such as this for my unleased mineral acreas: $1650 to lease, and $2000 to buy! My acreage is permitted to drill, so where do I sign on the dotted line to sell for $2000/acre??? Ridiculous. Like anything, companies are trying to buy for as cheap as possible, when these minerals, over the long run, yield way more than $950/acre or even $2000...Minerals are real property, and are not just oil or gas, it goes to the core.
Carl,
r.w.Kennedy has the right idea. Evaluate what the minerals are worth to you long term, your current needs and expectations for your lifestyle, and the emotion of "sellers remorse" Know beyond a doubt that the potential buyers are motivated by economic gain and that their only emotion is in the risk to reward potential. In other words, guard against the cost of loosing the opportunity of your ownership of the minerals, (your opportunity cost in selling them).
If you are in a hot area, there are several ways to realize some addition al cash without giving up the long term potential of mineral ownership.
I buy minerals or mineral rights all over the USA and sometimes sell some of what I purchase. I sold some last year that had not been drilled on (no activity) in 40 years. They drilled a well last year, it was a dry hole. I laughed all the way to the bank at the others who thought never sell. It can go either way so if you are considering selling check around with other buyers like put on mineralhub.com and maybe only sell half. I sold half of a 200 acre tract in Weld County Colorado that had never been drilled on, but it was permitted for a horizontal Niobrara well, they drilled a dry hole. Needless to say the minerals are not worth near as much now as they were. There is never a sure thing, hardly. You may have received an offer because of permitting in the area or other activity. Use your head and do research and then follow your heart not what I or others here have suggested.
Mineral Rights Buyer
Thanks for your comments.
Carl odom
Mineral Joe said:
I buy minerals or mineral rights all over the USA and sometimes sell some of what I purchase. I sold some last year that had not been drilled on (no activity) in 40 years. They drilled a well last year, it was a dry hole. I laughed all the way to the bank at the others who thought never sell. It can go either way so if you are considering selling check around with other buyers like put on mineralhub.com and maybe only sell half. I sold half of a 200 acre tract in Weld County Colorado that had never been drilled on, but it was permitted for a horizontal Niobrara well, they drilled a dry hole. Needless to say the minerals are not worth near as much now as they were. There is never a sure thing, hardly. You may have received an offer because of permitting in the area or other activity. Use your head and do research and then follow your heart not what I or others here have suggested.
Mineral Rights Buyer
How do you balance selling versus keeping? Seems like there should be the right time to sell just like real estate?
Cara, there is alot of difference in selling mineral rights vs real estate. The characteristics of both are different since mineral rights have the ability to eventually pay an amount for years to come whereas the sale of real estate is a one time transaction. In answering your question, selling vs. keeping, I believe that Mr. Kennedy and Mr. Hutchinson have covered that in their responses. This decision of course depends alot on what $ amount per acre is being offered. In most cases, the purchaser has done their homework thus knows the long term potential of the mineral purchase and guess who most likely will get the short end of the stick. The only sure positive factor for the seller of mineral rights is instant cash today. If I were considering selling mineral rights, I would do extensive research on what their value could be over a period of time and add some extra $$ onto that figure.
Cara Simmons said:
How do you balance selling versus keeping? Seems like there should be the right time to sell just like real estate?
That analogy is not correct as real estate can be rented forever and mineral rights may never pay a dime and even if it contains oil, gas and other hydrocarbons, it will eventually run dry. I have some minerals I'd love to sell to the people on here that say never sell or that your not smart to ever sell but I bet they wouldn't buy. They probably didn't pay a dime for what they have, they probably were given it for free thru inheritance and never had to put their money where their mouth is. Those who didn't sell their Barnett minerals when offers were to the moon and natural gas prices where $12 and headed higher made a foolish mistake. Offers, appraisals, what ever metrics one uses to value net worth of an item are but a fraction of what they were on those minerals. To have said never sell your Nasdaq tech stocks back in the year 2000 was also very foolish, here 12 year later it is still down almost 50%. Those who never sold their real estate and instead kept buying more in Vegas or Detroit Michigan or other parts of the country where housing prices are now down 54% like I read this morning on Yahoo were also fools. Never sell is for fools. There are no absolutes. No one can predict the future nor time the markets every time so I don't see how these people can say they know and it is never sell.
Sorry guys, no offence meant, just being real and factual.
Joe, by that token, you should sell everything you have, don't wait, do it now! You may never get another chance, do it now before you lose out. Put your money where your mouth is. No offence meant, I'm just flipping the script on what you are saying.
Some things in life are not for sale. You must not have inherited anything to disparage those of us who did. My parents worked hard and sacrificed much for the land they had and made a living off of. All of us children helped them and made sacrifices too. I don't consider myself a "fool," as you call it, for not selling my minerals. If I don't benefit from them, my children and grandchildren will inherit them like several generations before me.
Anyone can surely tell that also (what you just said) would be foolish and I never said sell everything so it wouldn't be putting my money where my mouth is. I also paid for everything I own (minerals included) with money I earned, I inherited nothing, there is a major difference from whence I speak. You try to disparage and ridicule me with your sarcasm. I know your a huge contributor here and help a lot of people and that is great but don't put me down for telling the truth and I am sorry you can not handle the truth because it goes against your beliefs and feel you must attack me personally.
If anyone could say what is in my statements are not true I would welcome the correction to better help myself and others to understand what is fact and what is fiction. I think people asking for help want facts not fiction and so much is just that made up out of ones own fantasy.
Joe, I take it you mean me. Joe you haven't put yourself in the place of the people you are disparaging, the ones who say never sell. They are giving the best advice they know. I am not one who goes around saying never sell. I think it must be decided on ones needs and on a case by case basis. I think most people who say never sell, do so thinking that it is umlikely that the average mineral owner will know as much about the value of their minerals as anyone making an offer to buy them, so they are likely to make a poor bargain. I do not disparage those who say never sell because I can see where they are coming from. Both of our posts contain "no offence meant", I actually meant it when I said it. Joe, I am going to say something I think will surprise you. Wheter you know it or not you are one of my best friends on this board, notwithstanding that you aren't on my friends list. I learn a great deal from you even when we disagree.
Not all things are created equal and holding on to all minerals for generations and for some to never make a dime maybe okay for some but for others it is not a sentimental thing but one of what contributes more to them. If ones objective is to find which is more profitable or valuable and contributes more to them then always holding never selling anything is a foolish plan. What or if i inherited anything has nothing to do with it, you tell me one case where someone would ask about if they should sell or not that has anything to do with what you are speaking of when saying some things in life are not for sale and you lost sight of the meaning of my statements and of the questions being asked and I am sorry it went over your head.
r. w.
I will address you direct. I believe you do a lot of good here and you always mean well. I and others appreciate your comments and advice. I normally never address anyone in person by name or pseudonym as it may be but more as a collective. I imagine over 50% of mineral rights in the USA are of no value and have been of no value. It's not to say that some day they might be generations from now or visa versa as I own some that where highly sought after for a couple years that now have no value. I hold minerals only for investment purposes and I was a fool not to have sold at times.
r. w. I hope you, Mr. Mallory, 6th Generation and others will always be around to help others as you have been so willing to in the past. You take the time to contribute so much valuable information. I and others continue to thank you all.
You can sell or not sell, but we have states with virtual no oil & gas production (I think Missouri might be one) & even counties in Texas with virtually no oil & gas production ( I think Kerr might be one).
So you can say -- never sell -- but if someone comes along & offers me $500 per mineral acre wherever I own minerals & I have minerals in 1 of those areas I will ask the person to please pull out their checkbook.
We are very lucky in Texas w/ a high % of the national production, but still probably only around 1% of the Texas tracts have a chance of being leased in the next 20 yrs.
Now if someone is sending you an offer to buy your minerals, there is likely production in your areas & you shouldnt hurriedly make that decision.
Dillon:
If I own minerals in an area with no oil & gas production and I was offered a very good price/acre for these minerals, my first thought would be why they are willing to pay this amount/acre if there is no future drilling on the horizon. My second thought would be "do they know something that I am not aware of"? My next action would be to learn as much about the area as possible utilizing any resource familiar with the oil and gas business. I would possibly visit the County Clerk office and find out the leasing activity in the area. If all research provides no positive outlook for oil and gas developement in the area, I would consider negotiating a sale but only if I needed some quick cash. Again, this is my opinion but I certainly don't critisize others who elect to sell. There are advantages on both sides of the keep or sell scenerio. When you sell, you should recieve two to four times the amount you would for leasing. On the other hand, if you sell, you will be giving up the right to recieve future royalty payments from any producing wells that may be drilled. I'm sure in the late 1990's or very early 2000's, one could have purchased minerals in both ND and MT for a small amount as some believed the area was dead. I believe that each individual should make their own decision and not allow anyone to influence their personal business. I do believe that the individual should do their homework before making their decision.
All of you folks are right in what you believe; Mineral joe in his future economic value approach, 6th Generation in his emotional obligation to keeping the gift he received in the family for future generations, Mr Mallory for his circumstantial evaluation approach, and RW for his instincts of value based decisions. The question of whether to hold or sell minerals will never be a "one Size fits all" concept. Truth be known, each of you uses the thought process of each of the other in decision making. The degree of use is what varies with us all.
I mainly side with Mineral Joe in my approach in that I have earned all the minerals I have ever owned and those I have today that include many commodities across many states. If I told you that I sold my interest in 100,000 acres in the Williston Basin in 1985 some of you would think I was stupid. But like Mineral Joe, if I hadn't sold when oil was less than $10/Bbl. I wouldn't have had the money to build an oil and gas exploration company, wouldn't have found a million barrel field in MIchigan, new shallow gas fields in Kansas, oil in Kansas and Oklahoma, start a minerals management business through which I acquired a large gold property in Nevada, and more recently, prospective mineral rights in the Bakken and Niobrara. I wouldn't have been able to put three bright sons through fine colleges and fund masters degrees for all, live a fine lifestyle and enjoy every day utilizing all my education, knowledge, and experience. I have no business with a large gold property at my age and sons who have pursued different career paths than mine. If I gave it to them in my will, i'm afraid it would be a burden to them rather than a gift. So I have picked a "walk away and never look back number" and sell it at what will be a huge bargain for the buyer and a huge relief for me after bringing it along for 20 years. I will never sell my oil and gas production because I don't want to take the risk to replace it. It will not be a burden to my heirs nor will I.
Two things remain key to each person faced with the decision to hold or sell minerals. What is the near term value, and what would I do with the money, time and emotions that will enhance my life if I sold. (That is called the opportunity cost of holding) The first question I answer every day for myself and many clients through geology, engineering, and economics. The second has nothing to do with the minerals themselves and is purely personal. I have clients who should sell, clients who must sell, clients who will never sell and clients who can't wait to sell. I can only give them science on which to base their decision, the emotional part of their decision is their responsibility.
And it is also yours as individuals. High emotion including near term greed and ego outweighs common sense most of the time. Mineral Joe, myself and numerous land men take advantage of that lack of common sense. Individual emotion based philosophy is the basis of your disagreements and criticisms, you can't put yourselves in the other guy's shoes. But you can and should find ways to scientifically analyze the near term potential of your minerals in order to rationalize the emotional based decisions you will ultimately make in finding that pair of shoes that best fits you.
So much for my lifestyle. Here it is Saturday night and I'm posting on MRF. I guess minerals are my life.