I have recently come across a few royalty interests with monthly payments ranging from $1400 to $13000. Depending on the market value, I may be interested in selling them; however, I am not exactly sure where to start. How do I evaluate their value? How do I find potential buyers? Any help would be greatly appreciated.
$13,000/mo. plus the other royalties comes in the mail, as prices recover [and they will] that will only go up & probably substantially so, why sell ?? your children & grandchildren could be cashing those checks decades from now. My advice is always 'NEVER SELL YOUR MINERALS'. You will never get what they are worth to you long term.
don't know how much money you need but 13k/mo coming in is good security at any bank, wish you the best with whatever you do.
to answer your questions-
1) depending on your area, 60 months of revenue is a good rule of thumb;
2) as to potential buyers, if you look at the Naro bulletin, there are numerous potential buyers. I would contact all or nearly all of them. the real value is what someone will pay for them. So, get more bidders, rather than less.
Andrew,
You may want to have the producing wells valued based on the projected economic potential expectation and then discount to present value. Add to that the expected near term development potential by geologic area if your clients desire to sell the royalty basis or real property rights. I find that it is best to deal with the risk takers that have an economic interest in each area and that is usually an established operator. Holding an auction or using rules of thumb will generally cause disappointment to the seller. All deposits, well completions, and local regulations are different making royalty income and real property values all different and therefore impossible to index.
Once you have a specific evaluation of the assets, the client should determine its desire to hold or sell depending on its specific expectations from the minerals. Again, every mineral owner need is different.
Big question is why do you want to sell? Tired of dealing with checks, etc. or are you just looking for quick cash? There are other options then just selling if you just need some cash to tide you over due to a life event. The others have answered the basic questions of selling. You will get around 30-60x cash flow but higher if their is possibility of more wells being drilled if the company is not trying to short change you. There is a lot of uncertainty sometimes with some mineral locations on future development and cash flow if the wells are test wells to hold acreage inside a play which can affect the offer. Look at your reasons why you want to sell and weight that against the option of possibility losing out on future income from these producing properties.
Andrew,
I sent you a message last Thursday. I hope you received it. If you could answer some of those questions, I might be able to help you better. Thanks
I sold some of mine due to my age. I got top dollar. Why not enjoy my life? Money in the bank is great too. My kids will inherit money without the hassles.
That’s expensive
There is an honest guy in Austin. Email me, I’ll give you his number. Just ask him… It’s free.
Andrew,
Please take a look at Ilios Resources, Inc.'s website and also you can visit www.allexperts.com where I have volunteered as an oil and gas expert over the past 9 years to help others.
Speaking with others who have done business with the company you are considering doing business with is always a good idea as well.
Best of luck.
Laura FitzGerald, CPL
Would you email me his name as I have interest in selling.
Thank You
Donna
I am interested in the "honest guy ' in Austin to discuss royalty sales.
I'm not the "honest guy from Austin" but I'd make you both an offer if your interested. Friend request me if you are and I'll send you a PM.