So glad to find this forum! I have been approached by an oil company with a mineral lease agreement. They are asking if they can make an offer for my land, home and mineral rights. I would be in favor of selling but I have no idea of how to go about getting a proper appraisal on my minerals? Can anybody give me some suggestions? I live in Midland Texas. My mineral intrest is 25% and my land size is 8.72 acres. We are part of a 653 acre unit. Thanks for your assistance! Josh
Are they wanting your specific surface location for a pad site? You might consider selling the surface, but retaining your percentage of the minerals and leasing the minerals. Long-term value of the minerals could very likely be many many times more valuable than a current buy-out option.
I start by researching the area via Railroad Commission of Texas. You can tell alot about the area from this site.
http://www.rrc.state.tx.us/data/index.php
If you how questions you can email me at workenman@hotmail.com
Thanks to both answers! I will take a look at the RRC website and see what I can find.
Charles Finley said:
I start by researching the area via Railroad Commission of Texas. You can tell alot about the area from this site.
http://www.rrc.state.tx.us/data/index.php
If you how questions you can email me at workenman@hotmail.com
Roadee:
I would take notice of the post by DJG when it is stated that the long term value of these minerals could be much more valuable than the buy out option. I'm sure that the operator is much more interested in the minerals than the surface area or home as they probably aren't in the real estate business. Again, I would strongly consider keeping the mineral rights and obtain a good lease for them.
I understand that the longterm value of these minerals may be much greater than todays suggested value. Bottom line is that my wife is very concerned with potentially living next to a pumping unit with small children. After the oil company offered to purchase some of my surface I informed them that we were uninterested in selling SOME of our property. I asked if they would consider purchasing our home too and they said they had actually discussed this prior due to needing housing for their new employees. Right now it’s just something we are considering but I cannot get a good idea of what the market survey for the minerals is.
charles s mallory said:
Roadee:
I would take notice of the post by DJG when it is stated that the long term value of these minerals could be much more valuable than the buy out option. I’m sure that the operator is much more interested in the minerals than the surface area or home as they probably aren’t in the real estate business. Again, I would strongly consider keeping the mineral rights and obtain a good lease for them.
Roadee:
Placing a value on the minerals is not an easy task and really must be approached as a comparison game. One suggestion is to research neighboring well production and the history of these wells as far as production and then determine what the revenue would be over a period of years. Another suggestion is to contact a reliable certified landman and let him do the research as what would be a reasonable price.
Roadee75 said:
I understand that the longterm value of these minerals may be much greater than todays suggested value. Bottom line is that my wife is very concerned with potentially living next to a pumping unit with small children. After the oil company offered to purchase some of my surface I informed them that we were uninterested in selling SOME of our property. I asked if they would consider purchasing our home too and they said they had actually discussed this prior due to needing housing for their new employees. Right now it's just something we are considering but I cannot get a good idea of what the market survey for the minerals is.
charles s mallory said:Roadee:
I would take notice of the post by DJG when it is stated that the long term value of these minerals could be much more valuable than the buy out option. I'm sure that the operator is much more interested in the minerals than the surface area or home as they probably aren't in the real estate business. Again, I would strongly consider keeping the mineral rights and obtain a good lease for them.
And keep in mind that it is completely possible to severe the surface and mineral rights so that you would retain your minerals even if you do choose to sell the surface property. Happens all of the time.
Thx for your helpful suggestions!
DJG said:
And keep in mind that it is completely possible to severe the surface and mineral rights so that you would retain your minerals even if you do choose to sell the surface property. Happens all of the time.
Thx! I have been doing my homework! I guess my only question now is figuring in how long these wells produce? When dealing with the sell of a business gross income over a seven year period is used to gain a figure…what is normal for oil wells that can produce over a fourth year period? And now with the new fracturing methods can we use old data to determine the info? Just a lot of questions???
Thanks for everyones help!
charles s mallory said:
Roadee:
Placing a value on the minerals is not an easy task and really must be approached as a comparison game. One suggestion is to research neighboring well production and the history of these wells as far as production and then determine what the revenue would be over a period of years. Another suggestion is to contact a reliable certified landman and let him do the research as what would be a reasonable price.
Roadee75 said:I understand that the longterm value of these minerals may be much greater than todays suggested value. Bottom line is that my wife is very concerned with potentially living next to a pumping unit with small children. After the oil company offered to purchase some of my surface I informed them that we were uninterested in selling SOME of our property. I asked if they would consider purchasing our home too and they said they had actually discussed this prior due to needing housing for their new employees. Right now it’s just something we are considering but I cannot get a good idea of what the market survey for the minerals is.
charles s mallory said:Roadee:
I would take notice of the post by DJG when it is stated that the long term value of these minerals could be much more valuable than the buy out option. I’m sure that the operator is much more interested in the minerals than the surface area or home as they probably aren’t in the real estate business. Again, I would strongly consider keeping the mineral rights and obtain a good lease for them.
That should be “over a forty year period” instead of fourth.
Roadee75 said:
Thx! I have been doing my homework! I guess my only question now is figuring in how long these wells produce? When dealing with the sell of a business gross income over a seven year period is used to gain a figure…what is normal for oil wells that can produce over a fourth year period? And now with the new fracturing methods can we use old data to determine the info? Just a lot of questions??? Thanks for everyones help!
charles s mallory said:Roadee:
Placing a value on the minerals is not an easy task and really must be approached as a comparison game. One suggestion is to research neighboring well production and the history of these wells as far as production and then determine what the revenue would be over a period of years. Another suggestion is to contact a reliable certified landman and let him do the research as what would be a reasonable price.
Roadee75 said:I understand that the longterm value of these minerals may be much greater than todays suggested value. Bottom line is that my wife is very concerned with potentially living next to a pumping unit with small children. After the oil company offered to purchase some of my surface I informed them that we were uninterested in selling SOME of our property. I asked if they would consider purchasing our home too and they said they had actually discussed this prior due to needing housing for their new employees. Right now it’s just something we are considering but I cannot get a good idea of what the market survey for the minerals is.
charles s mallory said:Roadee:
I would take notice of the post by DJG when it is stated that the long term value of these minerals could be much more valuable than the buy out option. I’m sure that the operator is much more interested in the minerals than the surface area or home as they probably aren’t in the real estate business. Again, I would strongly consider keeping the mineral rights and obtain a good lease for them.
If you are in an unit and are receiving royalties now, refer to your mineral tax bill. What the appraisers have done is take the futures price of oil and gas over the next year then use the predictions from the Energy Information Agency and PV10 to come up with a value.
That is what they are worth at 12-31 of each year, ONLY AS TO THE PRODUCING ZONE. What about other shallower zones that are capable of production up hole. You just gave those away. In addition to that, working over the wells, densifying the unit are all other items capable of increasing your asset value greatly.
Without your own geology, you cannot come up with a real number. There are negotiating techniques to minimize your risk, such as selling your minerals in the producing zone, from the currently producing wellbore, only.