We are currently betting multiple offers to purchase our leased mineral rights in Caddo Country. We’re unsure what the going price per acre is. One coming gave us an offer of $8500 per acre. Is this a low bid? We will be returning calls to several others and see what they offer.
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The offer will most likely be tied to the royalty interest that you have on the leased mineral rights. For example, if you are leased at 1/8th, the offer might be $2000/acre. If you are leased at 1/4th (Double the royalty of 1/8th), then you might get $4000/ac. If you have lots of acreage, you might get a higher offer than someone who does not have as much. If you have good, young horizontal wells, then you will get higher offers, especially if the buyer knows that new infill wells will get drilled.
Most buyers generally offer an amount for the producing wells that is calculated for three to five years of production and discounted for the time value of money. They do not typically offer for pending wells which is how they plan to make a profit off of the purchase. If you want to know about pending activity, then share the section and township and range and we may be able to help. If you are getting multiple offers, then probably is action about to happen. First offers usually are low just to see who will bite. You can sell all, sell none or sell part and keep part. You have to decide why you want/need the money or if you are willing to wait for the royalties in the new wells (which will probably pay off higher than the offer to purchase).
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Agreed with Mrs. Barnes above with an added story. We have a number of mineral acres in Caddo County in numerous sections. One of our Cousins needed some money and sold mineral acres in one section. Our first check for Royalty, representing a number of months of production, was larger than his sale amount. Be very careful of selling when there are multiple purchase offers. As Mrs. Barnes states so clearly, first offers are usually low compared to the gas that is coming out of these new horizonal wells.
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How many acres?
Definitely not a “low” offer. You’ll need about 700,000 BO production averaged at
$75.00 per barrel on a 20% royalty rate for revenue to approximate that offer amount. That’s assuming you’re interests are unitized on a 1280 acre basis. The foregoing also does NOT contemplate tax exposure on a potential sale.
Sorry about typo “your” interests