My family has received an offer to buy their mineral rights in 4,5,9,16,17, 20 and 21 in 16N - 23W. The last years royalties on these mineral rights were approximately $1,000. The offer they have is around $110,000 for 30 net mineral acres. The offer seems way over market unless someone is planning on new production in that area. Is there a website to find newly permitted wells in that area or maybe some other information an out of state mineral only owner would not know about? I’ve looked through a bunch of previous posts and the couple of links that I followed did not work anymore. I would mainly like to see what kind of production is currently in the area and if anything new has been permitted. Thanks for any help!
You are smart to ask the WHY?
There is a new Cherokee horizontal shale play in that area. You have new permits in 4/9/16 and 16/21/28. The buyer would love to buy that out from under you before you realize that one well was spud in August and is about to be finished and the other well was spud in October.
If your name and address are properly filed in the Ellis County courthouse with a description of your acreage, you should have received massive mailings about the new wells from the OCC.
They have positioned those new wells to allow for future infill wells, so keep that in mind. Personally, I wouldn’t sell if I have royalties pending in a few months.
The northern well is Rockies Resources Holdings Helen 0416 1CH. The southern well is Rockies Woodrow 1628 1CH.
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Thank you James and Martha. That is exactly the type of information I was looking for. I am guessing the companies making offers are looking at production numbers from similar wells in the area to formulate their offers. Is there a company or service that can help with this decision? Having some sort of estimate of possible production times their royalties to give an annual payment estimate vs. the offer they’ve been given. I was off on my earlier numbers and I guess it was closer to 3k they received last year. $110K is sounding really good to them right now but they have no knowledge up the upcoming wells and production in this zone. Thanks again for any help
Yes, the operators understand the geology and the reservoir performance for the area. Most buyers offer an amount based upon the known current production for a certain number of years, discounted for the time value of money. Some offer a bit more if a well is permitted and drilling.
If the buyer has offered $100,000, then highly likely that the upcoming wells are worth quite a bit more. Remember that the buyer intends to make a profit off of their purchases. Not only should one consider the current wells with permits, but the potential for infill wells. Our family thinks generationally and that has paid off in $$$ by being patient and waiting for plays to develop.
The Directories tab above has Pecan Tree appraisers. They have a tool that can help. I have not used them, but the owner of the company has given several excellent presentations at NARO meetings.
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I would exercise patience in making any decision. The first rule of thumb, anyone making a purchase offer has reason to believe the property value exceeds the offer price. Most of these offers are from brokers, even though they will tell you they are principals, so be very cautious. Do not sign a Letter of Intent or Deal Sheet, since they only favor the Buyer. You can contact Pecan Tree oil & gas for an evaluation. I have never used their service, so this is not an endorsement.
Thanks for all of your help. Is there a website that I can find monthly well data for new wells? The Walter 0517 #1CH is the well I’d like to find data on. I found a webpage that shows 104,078bbls but it doesn’t say if that was a total of last year or if it was a particular month. I think I have figured out the total royalty on those barrels but don’t know what kind of time frame is covered. Also am I correct in thinking that if I had 2.53 net mineral acres in 5-16-23, that I would figure the royalty and then multiply the royalty at the end by 20% because that section has a 20% allocation?
For Oklahoma, the well filings (permit, completion, etc.) for the state are found at the well records site.
For the production data, go to the OK Tax site.
The formula for the decimal on the DO in OK is:
net mineral acres/actual spacing acres x royalty x % perforations in your section. The percentage amount will be found on the OCC order.
Yours will be approximately 2.53/640 x .20 x .45=0.00035578125 The last term should be on the Division Order. I am estimating from the well path. The map looks like about 45% in section 5. You do not have to sign a DO in OK and it is recommended that you do not as you may give away some of your rights. Use the search glass at the top right to look up “Letter in Lieu” to get directions on how to respond instead.
OTC site:
