HI, I have 797 acres leased. I have been contacted by several companies wanting to buy a portion or all of the rights. I would be willing to look at selling 1/2 of my rights. Does anyone have an idea of the going price for the rights and is there a site that shows those transactions? thanks, kathy
Several things you might consider rather than a sale of a portion of your mineral interest. You can sell a portion of the royalty interest in the lease that you have executed rather than the underlying mineral interest itself. That way, if the lease expires, you retain your mineral interest for the future, but you have hedged your bet by selling a portion of the royalty proceeds from the current lease. You could sell an undivided interest in all 797 acres or you could sell a divided portion if you had some preference as to which portion you would like to retain. If you do sell a portion of the royalty however, I would recommend that you retain those depths below what has been drilled recently in your area (all depths below ten thousand feet for example). The reason for this is that the purchaser more than likely won't assign much or any value to those depths in the purchase offer, so why not retain the rights rather than just throwing them into the deal for nominal consideration? In any case, I would recommend you hire an oil and gas attorney to draft the documents for you.
This of course does not address the issue of what either the mineral interest or a royalty interest might be worth in a sale. I would guess however that if you have had several offers, someone has some information that you might not have regarding the value of your property and they are hoping to capitalize on that information. If you have the means to do some research on drilling results in the area, it would probably be more than worth your time and effort.
If you are determined to sell either a partial royalty or mineral interest, you might consider an auction house rather than sale to whoever happened to approach you in order to evaluate the most possible offers. There are several available; here is one that I am familiar with.
http://www.ogclearinghouse.com/
Good luck to you
Ed
Thanks Ed, sure something to think about; makes good sense. Kathy
Ed said:
Several things you might consider rather than a sale of a portion of your mineral interest. You can sell a portion of the royalty interest in the lease that you have executed rather than the underlying mineral interest itself. That way, if the lease expires, you retain your mineral interest for the future, but you have hedged your bet by selling a portion of the royalty proceeds from the current lease. You could sell an undivided interest in all 797 acres or you could sell a divided portion if you had some preference as to which portion you would like to retain. If you do sell a portion of the royalty however, I would recommend that you retain those depths below what has been drilled recently in your area (all depths below ten thousand feet for example). The reason for this is that the purchaser more than likely won't assign much or any value to those depths in the purchase offer, so why not retain the rights rather than just throwing them into the deal for nominal consideration? In any case, I would recommend you hire an oil and gas attorney to draft the documents for you.
This of course does not address the issue of what either the mineral interest or a royalty interest might be worth in a sale. I would guess however that if you have had several offers, someone has some information that you might not have regarding the value of your property and they are hoping to capitalize on that information. If you have the means to do some research on drilling results in the area, it would probably be more than worth your time and effort.
If you are determined to sell either a partial royalty or mineral interest, you might consider an auction house rather than sale to whoever happened to approach you in order to evaluate the most possible offers. There are several available; here is one that I am familiar with.
http://www.ogclearinghouse.com/
Good luck to you
Ed
Those might be good suggestions as to only sell a royalty interest in the lease but a buyer will only pay accordingly and I can not imagine they’d give much unless it were producing. Maybe sell a portion in any future production with perhaps term limits. I have been buying mineral rights in Weld, Moffat, Routt, Morgan and other Colorado counties and a buyer of minerals nationwide in producing states and I see a lots of prices. For anyone to give an idea of what they believe on pricing there is some information they’d need such as what the terms are that you leased for, who they are leased to and in Weld or any county what section, township and range they are in. For instance, I seen a buyer that had recently leased for 5 years at a 1/8th in a part of the county where they had drilled nothing but dry holes into the J-sand, D-sand and Codell formations which are the main producing formations in Weld, not worth near what minerals beside proven producing Niobrara wells with a 3 year lease expiring soon leased at 20% no deducts with various clauses added to the lease to benefit the mineral owner as another seller had for sale. To hedge and sell a portion is a wise decision from my point of view as there are a lot of tracts in Weld that have dry holes in normal producing formations, if they drill a Niobrara and it doesn’t produce then it will be worth very little. If you do sell at auction make certain to set a reserve.