Out of State Mineral Owner

My rather large family has inherited a few acres and someone is wanting to purchase the mineral rights, The land is in Converse County and none of us live in Wyoming anymore. How would we go about finding a good price for it, have heard “never take one persons opinion”, would like to know more before we make a decision. Thanks

Location is key, but if someone else is trying to buy they are very likely in a decent fairway. Could be worth a lot. We have seen prices really escalate in the past few years.

The land is in township 34 North, Range 70 West if that helps. Thanks

With the level of activity in T34N, R70W and the recent Turner well successes in this area I would not be willing to sell at this time. These buyers are likely low-balling significantly. This area has stacked reservoir potential so value should increase over time as the formations are proven. Currently Parkman, Niobrara, Sussex and Turner production is in the area.

1 Like

Mr. Clausen, my mom has mineral rights in T33N R70 sections 19,20,29,30,31and is thinking of selling. Please give me some advice or numbers that I can relay to her impressing the importance of not selling. Thank you in advance.

There are numerous wells producing in section 29 from Sussex and Niobrara which are part of the Combs unit. I don’t know if she is receiving royalty from all of them yet. Chesapeake is going to have six rigs drilling in the Powder this year.

You might log into their website at: www.chk.com and go to the investors section and review some of the Powder River info and the stacked possible pay in the area. The Mowry is a new potential in that area and is doing well further north it also looks like the Turner should be possible.

Purchase offers are coming almost daily but most of them are just like house flippers buy cheap and sell high also do not sign sales agreement or deed without money in hand. No future payment. The flippers like to get a contract and deed then turn it to a company so they don’t spend their money.

34N 70W is a very good location in Powder River Basin. As Mr. Clausen mentioned above, there is significant stacked pay potential in the area, including a narrow band of Sussex Sandstone that runs through the eastern edge of the township. Chesapeake has several new wells that you can see highlighted below in red (yellow sticks) that are a combination of Sussex and Turner wells. If the Turner wells produce similar to some of the wells Anschutz has turned on, then the value of your minerals will greatly increase. If they perform similar to what Chesapeakes early Niobrara wells did, your value will go down as the Turner is the main price driver in that portion of the basin right now.

You can see on the map that there are a large number of permits (orange sticks) in the township, but in Wyoming that doesn’t exactly mean that someone is motivated to drill those locations so no a lot can be inferred from them. Nearly the entire basin is covered in permits that will likely never be drilled.

The only way to ensure you are going to get a good price is to make sure you are getting bids from as many buyers as you can. Most will low-ball unless they know they have competition. Rarely do mineral owners actually get paid a “good” price as they only have offers from one or two buyers. If you are going to sell, make it competitive.

I hope this information helps,

Craig

33N 70W is another “core” or good area for Powder River Basin. It is located in a very mature, or hot part of the basin which causes the hydrocarbons to be very gassy and the rock to be very overpressured and difficult to drill. These attributes tend to de-value the acreage because it is not as economical as other areas. Keep in mind it is still a very good area, but it just might not carry the same prices as you might find 15-20 miles to the northeast.

Your specific tracts can be seen highlighted in blue on the map below. Fortunately for you, your minerals lie on top of a very thin sandstone that is full of oil in the Sussex Formation. Chesapeake has drilled numerous horizontal wells in the formation and will likely drill additional infill wells throughout your acreage. There is also hydrocarbon reserves in the Niobrara, Turner/Frontier, and Mowry that will likely be drilled in the future.

All in all, if nobody is willing to pay you an appropriate discounted net present value of the potential reserves, don’t sell. Figure out what that is and see if someone is will to offer that to you. If they won’t, keep them in your pocket. Mr. Clausen provides some good info in his post about being aware of the flippers. Take his advice seriously and never sign anything without being paid first.

I hope this info helps, Craig