Over the past two years since my mineral intrests in Weld County have started to generate income thanks to fracking, I have recieved many offers to pruchace said rights in amounts that very greatly. Can you landmen, or those in the know give me a general idea of what "currently" might be the upper limits ($$) of what is being offered per net mineral acre in Weld County.
Be careful about selling your mineral rights as your income can far exceed your selling price if their is good oil and gas production. If the property taxes are not much, you may want to consider holding on to it unless, of course, you are in need of the money now. Hope the best for you.
Thats the million dollar question, or important decision tree one faces. Points well takin with gratitude, Neil.
Mr. Rocke, unfortunately 1N-57W is in Morgan County, Colorado (not Weld) and with current technology the Niobrara is not productive in that area. My apologies for being the bearer of bad news.
This might be what I should have posted initially:
Township 10 North, Range 57 West of the 6th P.M.
I would echo Nell's comment regarding being hesitant to sell unless you absolutely need the money now. Even if you sell, consider only selling a percentage to cover current cash needs.
Regarding the price per NMA, it varies greatly by location. In the core Wattenberg where minerals are prospective for both Niobrara and Codell, prices are much higher than on the Eastern flanks where there is only Niobrara potential. To give you a feel of some of the deals in the past year, Synergy's purchase of 33,100 net acres from Noble went for $505 million (roughly $15,000/NMA). That said, that may come with actual physical assets in the form of infrastructure, etc. so that is a bit of an apples to oranges comparison. I've seen deals in other non-core parts of Weld county with just minerals and Non-Participating Royalty Interests go for $4000-$5000/NMA.
In any case, any offer should place a value on current production as well as future cash flows from wells that have not been drilled yet (permitted or otherwise). It is a pretty straightforward exercise to forecast production and expected revenues and do a discounted cash flow analysis to come up with a value. Be sure to get multiple bids or an appraisal before pulling the trigger.
Excellent advice and thank you for providing a clearer picture, Matt. I am not with any real need for cash presently, but with a recent offer of $12k per NMA, I wouldn't want to pass on taking the cash and putting it to work elsewhere if I couldn't hope to realize a total of the $90k offer in say 10 years or less. Royalty income to date from my 7.5 mineral acres has been all over the map. So, just trying understand this market more and explore the options.
Matt, what you just wrote certainly is apples to bananas comparison. The Synergy buys Noble acreage is leasehold (Not Minerals) this is a total different valuation. The Deal came with 2,400 Barrels of Oil or Equivilent per day and many proven acres to infill with more wells and other horizons to explore. LeaseHold and Minerals are not the same. The going rate to buy the actual net minerals is 2-3 times what the average lease cost is. Non HBP lease hold keep in mind. Example take 300 acreas currently leased to XYZ opertor for $1,500 per acre times 2 or 3 would net a mineral seller between $3,000 and $4,500 per acre. I just want to reiterate that Leased Acres whether HBP or Non HBP is not the same as minerals whatsover.
Jason, Thanks for clarifying the leasehold vs. minerals valuation difference. I thought I had mentioned that (hence my apples to oranges reference). In your reference to the going rate of minerals, I assume you are referring to 2x - 3x the lease bonus amount? It wasn’t clear but if that is the case then I would agree that that is an ok for a rough ballpark number but would grossly undervalue minerals in core areas where there is a lot of activity. At the end of the day, to get a close approximation you need to look at offset production to determine a reasonable estimate of reserves and then also take into account other nearby sales. At the end of the day, the market will determine the fair value.
Some good dialogue here thanks.
Yes the 2 to 3 times of going lease rate is what I mean.
Core areas i see leases going for upwards of $3K per acre so if someone wanted to sell there minerals an offer of $9,000 per acre and up would be great.
However i have seen some acreage in NE weld in the Niobrara high thermal maturity range that has or will have 20 or 30 pad horizontals go much higher.
If i was to sell acreas and they had 20 or 30 producing HZ wells I would certainly factor that in my asking price.
My point was to deliante that minerals and lease acres are much different.