Received offer to buy our mineral rights now what?

Louisiana Mineral Rights Caddo Parish, LA
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Louisiana Caddo Parish T16 NR16 W16

We’ve verified our mineral rights on 6.6 acres

Purchased land 5 years ago.

Have dismissed letters and not answered calls. Until recently. After call, received requesed emails with run down of our conversation which started with no Operator activity on our property.Also received docu sign contract with offer. $7800 per acre to buy rights. This is 1st actual offer. The man seemed to have done his research before calling.

I’m not sure how to research my area specifically to get an idea of anything going on or planned. I know our neighbor next door has Gas storage tanks on his property. They are fed with pipes from a well (or looks to be one on map).across the road thats in front of both our properties, down our property line to tanks. This happens before we moved here. There doesn’t appear to be many wells in our section. And my neighbor claims they havent been out to collect any gas in a while. Possibly that well isn’t producing as it was.

One question would be why they want it. With his assumption of no surface activity on our property. Am I wrong to assume the payoff would have to be from horizontal drilling or the removal of gas from under our property thats connected pool?

What’s a legitimate resource for getting more offers? Like list on a auction type website or just contact companies individually..

If we decide not to sell… other than just doing nothing and just retaining rights. Continuing to seek adviceand research. What other type offers could I ask for if any?

Theres no wells on our property and we do not receive royalties.

And information would be appreciated. We’re very new to this.

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if you are in sec 16-16N-16W, Chesapeake-now Expand- was leasing in 2024. They have an active horizontal well. You should be getting royalties on it. You probably mean oil storage tanks. Gas is transported via pipeline, not stored in tanks from a well. Section 16 has room for several more horizontal infill wells. Suggest that you contact Expand’s Division Order department and see why you are not getting royalties. The well was drilled in 2009-10. Offers that high indicate that someone knows something about future drilling.

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Received 2nd offer from different company (unsolicited) but welcomed. $8500 /acre.

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Question.

If I sell. The upfront bonus is all I would get for at least 10 years? (No matter what)

They would be buying that (mentioned) 20% stake when/if it comes time that a well produces? Hypothetically if an operator drills and starts producing. The owner of those rights would get 20% royalties? And operator gets the remaining?

I know theres a lot in between all that happening.

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I am no expert but what ever they are offering is probable way less than 15% of the actual value. I would sit tight unless you are planning to sell your property soon. Best wishes!

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if you sell, the sales price is all you will get forever as you will hand over your mineral ownership and the deed is done. You may also have capital gains issues. You will also forfeit any royalties that are being held in suspense at the operator. It is the mineral owner’s responsibility to contact the operator to get into pay status upon a sale. Suggest that you contact them immediately before contemplating the sale.

If you sell, then you will lose the 20% royalties that would come with the current well and any future 20% royalties from any infill wells. Operators frequently drill a first horizontal well to test the acreage and hold it by production. If economic, then they may come back in later and drill infill wells. Think of cigars lined up in a box. You would lose out on those future wells.

The increasing offers are a hint that several someones know what they think is about to happen. In general, those offers tend to be for a discounted cash flow return of about 3-5 years of pay on the current well. They plan to make a profit on the remaining life of that well and any future wells. Our family chooses to hold acreage where there are active horizontal wells with potential for future drilling. We think generationally, not just this year and one well. Up to you to decide what your financial picture looks like. This business has risk, so no guarantees for future wells, but given what is surrounding you, they look likely.

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Hi Ms. Barnes, this wasn’t my question but I just wanted to say thank you for all the information (and depth, and “things to think about”) that you provide to people on the site. You helped me identify some things earlier this year that I don’t think I’d have ever found otherwise. Many thanks! Kim (aka LouMamou)

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Thank you ….I did reach out to Expand about current well. Heard from a couple sources old well hasn’t been doing much at all lately. With that said any funds in suspence would come to us. And would be in any contract we consider.

Would horizontal drilling near by (not on my property) keep Louisiana prescription from happening? Assuming a new well is producing.

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Home is 4 years old. Prolly never move. I’m 52. I can’t start another mortgage. Lol

I think electricity the goal. NG and Nuclear will be th biggest energy sources used in new infrastructure for data centers. Not just here… Global.

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In that area, you can get 25% royalties and a lease bonus not too far off from your offers to purchase. If you are needing to sell, then definitely wait for a better offer, but leasing in such an active area is an excellent option. If you don’t want to lease or sell, you will most like become an Unleased Mineral Owner (Louisiana’s form of forced pooling), which means once a well reaches payout status, or the operator has recouped all of it’s costs for the well, you will be entitled to royalties at a larger percentage than if you lease. It’s weighing risk, reward, and whatever financial goals you have.

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Thank you, I’m not sure how to reach directly.

I did have a question on lease plus bonus. I would be interested in reaching out for these type offers. I have list of area buyers. Knowing any red flags upfront would be great.

I guess knowing whats in it for the buyers in a lease situation with me receiving 20%-25%royalty would help be grasp this…

My assumption would be the buyers are counting on the higher rate once cost is paid. And getting anything over the 20% -25% ?

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Do this mean theres no lease options at this point?

We did have mineral rights transferred at time of purchase. But they didn’t say anything about any royalties or wells so we didn ’t contact anyone at the time. I have now contacted Expand who has a horizontal well in section. No word back yet. I called and was told they would contact me after sending documents required for ownership transfer. Not sure if theres a faster way.

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$8500 is low for that area for selling your minerals. You should be in the 10k range minimum.

When you bought the house if the owners did not reserve the minerals then they pass on to you, however, it’s the new owners responsibility to notify the oil company. Most likely they’ve been paying the previous owners, also most likely at this point, it isn’t much money.

The initial haynesville wells declined quickly so a 2009 well is probably producing very little. They will most definitely be drilling more wells, at least two to three possibly up to five with current technology. The haynesville units were originally one section (660 acres being all of the 16-16-16) but now most are at least two sections. The newer wells have better decline rates than the older wells.

if there has been gas (in paying quantities) with no more than 6 zero months in a row - expand will probably not have new leases signed. Instead the original lease is “held by production” and it will continue to govern the terms of the agreement.

if you sell your minerals, the buyer will own them until there is ten years of no production. Then they will revert back to the surface owner - whoever that may be at the time. Production that interrupts prescription is the spudding of the well, production that holds minerals is any oil or gas that is brought to the surface and sold “in paying quantities.” In order for the ten year clock to start production will have to stop and no new production or spudding can happen for ten years. In your area that there is a good chance that the minerals will be held for decades if you sell them. You get nothing other than what you are going to be paid per acre.

currently the price of gas is low but all signs are pointing to a substantial increase in the not so distant future. If your unit is HBP expand is probably getting everything lined up to drill - all the legal requirements - or they could already have you on the schedule and they just haven’t gotten to you yet. A lot of companies are just siting for the prices to rise - these wells are very expensive.

If you sell your minerals it is probably that in the long run you will make less money on the sell than the people who buy and collect the royalties but of course this is a gamble and there is also the question of what would you do with the money if you did sell. It’s possible your returns could be higher than you would have made on the wells. No one can answer these questions without a silver ball but people are wanting to buy the minerals to make money-not to do anyone a favor.

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The difference between selling and leasing is with leasing you retain the ownership but are leasing the operator the right to develop your minerals and because they are bearing all of the cost, they keep the majority of the proceeds from the sales while you are paid whatever royalty rate you negotiate, say 25%.

The lease bonus is paid upfront when the lease is executed. If you sell, you hopefully get a higher payment per mineral acre, but that’s all you will receive because you no longer own the minerals. (There are a lot of nuances in Louisiana that could affect various aspects of this, so this is boiled down to the bare bones of a transaction.)

When I said you would be made a Unleased Mineral Owner at a higher rate, it’s because you do not have to share the proceeds with the operator as you would if you were leased, BUT you will not receive anything until the well is completely paid for, essentially you become a working interest owner and pay a share of the costs by not receiving royalties at first production, but only IF the well reaches payout. If the well is a dud and never recoups its costs, unleased mineral owners never receive a dime (they do not, however, owe any money).

So, you have to weigh your options against what your financial needs and goals are. Selling will get you the most money right now. Leasing will get you some now, then monthly checks will kick in after the well is drilled and starts producing, say 24 months. And waiting to see what happens as an unleased mineral owner is nothing now, nothing for the 24 months it takes to get the well into production and say another 18 months for it to recover its costs, if it even does. At that point you will get a larger percentage than if you were leased. As I said before, the percentage is larger because you are not splitting with the operator. For example, say you own 100% of the mineral rights for 10 acres in a 1000 acre unit and you lease it at 25% royalty, you now own 2.5 net minerals acres and your royalty interest in that unit is .0025, but if you are an unleased mineral owner, you do not give 75% of the royalties to the operator, so your NRI is .01 but only AFTER the $15 million well is paid for.

This is not to say being an unleased mineral owner is better. Having a legally binding contract with the operator mitigates risks and is the preferred method, I am merely pointing out the different options in Louisiana. This is all very basic and overly simplified, but I hope that helps clarify things a bit.

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Certainly appreciate the simple explanations. The previous owner (plus many if not all in section) signed *lease for 20% in 2004. I believe I now understand what that means. I do not have a lease option with royalty negotiations but I do retain the actual rights to that 20%? Expand has 1 horizonal well in this section about 15 years old . So it’s declined significantly of course. But producing enough to put off prescription. I don’t know if they plan on utilizing that well in any other way or if it’s possible for new future horizontal drilling. We are waiting on expand to change ownership. Which I should have done 5 years ago… But was never told by title company or anyone else.

I do apologize if my statements or questions sound assumptious or uneducated.

My next door neighbor received offers up to $14k per, but still retains rights. His target was $18k and they never got there. He has a similar tract. Close to 7acres.

My mind set is more long term… 5 years down the line. All analyst I’ve listened to project energy needs to rise yoy. For next 5 to 10 years. Specifically electricity and the enablers of that.

As stated any selling of rights would need to be significantly! higher to even consider at this point.

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The production isn’t putting off prescription. The lease is being held by the production. There’s a clause in every lease that the lease is valid as long as there is production “in paying quantities.”

Prescription does not apply to the leasehold rights only the mineral rights. Prescription comes into play when someone severs some part of the mineral estate from the surface estate of the land.

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Ok so if/when Paying quantities end. How long before lease expires? Or is that per individual contract?

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If there is production the lease is held until there is no more production. They will have some time to “rework” the well. The initial lease term is set by the lease itself and there are terms in that which deal with periods of time when they are conducting reworking operations but in the vast majority of leases those terms are pretty open ended and there’s nothing saying x amount of months are anything like that. More than one oil company has been sued to release a lease at the end of production, sometimes they have a hard time letting go.

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