Possible payout from a producing well

I have 20 acres of mineral rights in Washita Co., Ok. I leased these 20 acres with a 3/16 royalty.The lease expires 10-11-12. Last week I was sent an offer to purchase my 20 acres for $1600 per acre ($32,000). I called and question them about the sudden interest. He said there was a well being drilled apprx. 4 mi. south of me and they're going for the Springer Formation (22,000') and anticipating gas. If it hits prices go up if not they go down. My question is this...I have no experience in knowing what the possible payout would be if they were to drill in my section and hit gas. I need to know what the possibilities are for payout. I know there is no absolute answer because of the variables involved but it would help me if I could get a ballpark idea of what kind of money is possible. If someone could give me some kind of an idea for say a low producer, a medium and a high producer. I have no figures to base a decision on. Thanks.


My advice is not to even consider selling these minerals as they could be very valuable over the long haul. As to the payout from these minerals, there are too many variables to deal with such as the market values of these minerals, the amount of production from the well and the cost to get them to market. Bottom line, hold onto your minerals and never consider a sellout.

You could also research the production of nearby wells and possibly arrive at an approximate figure but remember that your well might not produce as much or could produce more than the nearby well.


To add to Mr. Mallory's excellent advice. Don't sell. I own and manage mineral rights and have wells in the area and suspect that the offer to buy is for a different reason than they gave you. Even if you have a need for cash now, try to hold off until the end of the lease term. If the lessee gets a producing well, you win big time, if the lessee doesn't drill, you will be shocked at what you can get for a lease then; in my opinion. In the meantime, don't issue a top lease.

What section, township and range? If you let me know I can give you a better idea if it is a good offer or it's too low as I know the county activity and pricing well.

It makes a big difference as to where it sits in the county. There are parts of the county you can pick up all the time for only $600 per mineral acre and other parts are worth more than your offer. Do realize this, if you turn down the offer and they don't drill or the well is not a good one, the people who think they are psychic or want to solicit their business and told you not to sell won't give you the $32,000 you turned down. One needs to make an informed decision not just a rash generalization call.

Gary, without knowing where in Washita county her minerals are you say you offer much better deals than she was offered. I have 110 net mineral acres in Washita I’d be happy to sell you since your offer is open to all of the county and your offer is for more than $1600 per net mineral acre. I can also get more, how many do you want?

Without data and context, it's reckless for someone to give advice on whether to sell or not to sell and short-sighted to take said advice without proper analysis (which you are unlikely to be able to do on your own without a decent finance and industry background). I have bought and sold hundreds of mineral properties over the years. Sometimes these investments work out well, other times I pay too much and the minerals never generate the amount that I paid for them - you never really know whether a mineral purchase will pay off until you let the whole movie play out, but rarely do I see Sellers disappointed by the money that they lock in by selling and taking all the uncertainty off the table. I have absolutely NO IDEA whether the offer that was made to Sandra was fair or unfair since I don't know anything about the area or the range of value of her particular set of minerals, but I'd advise her not to listen to people who irrationally state that minerals should never be sold. That's just bad advice.