Severing mineral rights?

General Mineral Rights Discussion
#1

About two years ago, my husband and I signed a lease with Carrizo, but they are sitting on the leases and everywhere around us, Chesapeake is drilling. Our lease will be up next year. We are selling our home in central Arlington to move to another city in Texas, and we had planned on keeping our mineral rights. In this poor housing market, we have received an offer on our house, but the buyers are insisting on the mineral rights. We walked away from the deal once, but now they've come back and asked us to put a value on the rights.

Is there a professional out there that we could hire to help us come up with a value (I know some things will fluctuate - like gas prices) but just a ball park? I'd like to keep our mineral rights, but I also want to sell our house!

Thanks,

Casey

#2

Dear Casey,

There is no higher expression of capitalism than the buying and selling of mineral rights. As a rule of thumb, I use 3 times the last bonus received. For example, if I received a bonus of $500 per acre, I sell or buy the minerals at $1500 per acre. Having said this, we are only talking about general guidelines and a willing buyer and willing seller could arrive at any price.

Something that you might want to consider is allowing 1/2 of the minerals to go to the purchaser for a term of 10 years and as long thereafter as there is production in paying quantities. At that time, the minerals flow to the surface owner. This might be a solution that is satisfactory to all concerned.

#3

Thank you, Buddy! When we signed our lease, we got stuck in the middle of a bidding war; I’m not sure that will ever happen again! We just have 1/3 of an acre, would it be wise to hire you to estimate our “future cash flow”? Part of our hesitation in selling our mineral rights is the economic unknown and part of it is the possibility of leaving a legacy for our child. Again, I appreciate your answer and thoughts - they were very helpful! Casey



Buddy Cotten said:
Dear Casey,

There is no higher expression of capitalism than the buying and selling of mineral rights. As a rule of thumb, I use 3 times the last bonus received. For example, if I received a bonus of $500 per acre, I sell or buy the minerals at $1500 per acre. Having said this, we are only talking about general guidelines and a willing buyer and willing seller could arrive at any price.

Something that you might want to consider is allowing 1/2 of the minerals to go to the purchaser for a term of 10 years and as long thereafter as there is production in paying quantities. At that time, the minerals flow to the surface owner. This might be a solution that is satisfactory to all concerned.
#4