We have 319 acres in Weld County 12-66-22 and 160 acres in Morgan 4-60-28. Both are just mineral rights. The weld couny propery has been leased and Noble holds the lease in which the 5 year ends this year with a 3 year option to extend We received about $7000 to sign the lease at 14% royalties.
The Morgan County property was signed last year and we received $240,000 for a 5 year at 1/6 royalties.
I was wondering if anyone has any insight as to what these may be worth if we choose to sell.
Thanks
Probably as much as anyone is willing to pay for them. It can be a tough business. For everyone who has made it rich, you can find someone else who has declared bankruptcy, committed suicide, ended up on the streets etc...
You get some good advice here, but don't buy into the advice that a mineral buyer always calls you because they know something that you don't. That's unadulterated B.S. Buying minerals is mostly speculation and a gamble that the buyer hopes will pay off big some day. He knows that there is no guarantee when he writes the check that he will always get a substantial return on his investment. He often loses money.
Skip, I think Dave Quincy has the right of it, except I think whether the buyer knows about something big about to happen or not, they probably know more about it than we probably do, and quite frequently they do know something that we don't, so be very cautious in your dealings.
I also believe that acres unemcumbered by a lease have higher value than those under lease because the buyer could choose to participate in any well drilled on unleased acres and even if the buyer is willing to lease the acres, they can probably get a lease at better terms than we could. I believe that I have seen several posts from people who have received offers and it was xxx if you were leased at 1/5 and a lesser xxx if leased at 3/16 and presumably less if leased at 1/6 or less and so forth.
I guess the real question is in most cases if one decides to sell. I was more looking into a ballpark type figure.
Say the Weld property with Noble. Noble plans on investing 1.7 billion in Colorado in 2013,,,,,,, Property is just outside the active zones but every month they are getting closer. I see on COGCC there are recent permits 5 miles east of our location and some just south. I was just wondering if offers are in the 5 digit or 6 digits for say a property that is in a potential hot zone since we are 30 miles from Jake.
I wouldn't just go with one opinion. There are too many variables involved. You can list them for 6, for 5. In the end it will come down to what a buyer wants to pay for them.
I think if you want 6 digits you had better be counting the two spaces after the decimal point which would take you to 9999.00 per acre or plan to have your leases lapse and participate in a producing well before you sell the proven acres. Mere mineral owners rarely get the offers that pass between oil companies.
Skip, mentioning 6 digit / figures raises my curiosity as to how much you think it's actually worth. I am also curious if you have looked at the Weld county group where Jason Haak is saying the wells are ok but that they are declining fast. Go to Jasons home page and look at his posts over the last year. I don't always agree with Jason but he owns a piece of it so I believe that he is keeping a sharp eye on the productive potential and from what he says, I just couldn't reconcile even $10,000 sale price per acre with the production they are getting if the acres were leased. Let me know what you think.
Skip,
since you seem to know your way around COGCC then you should have already noticed the wells as they are getting further from Jake and closer to your minerals and how production is not proving to be economical for most of the wells. This would have been one of those where you probably lost the time to sell as most buyers have pulled out of buying Niobrara and operators are pulling out also. Too many on here of MRF say never sell your minerals but in your case they will probably have cost you hundreds of thousands of dollars had you listened to them. Good luck finding a buyer and if your lucky enough to find one I know he won't be offering the $2000+ per acre you could have gotten.
Joe, I think it's pretty plain that Skip never seriously considered selling. Six fugures per acre? For unexplored and un proven acres? In an area that was pretty thin after the first year? Do you seriously believe that Skip would have accepted $2,000 per acre when he thinks it's worth $100,000, that being the lowest six digit figure? Joe, I think you need to cut others some slack on their opinions because they are not responsible for Skip's present situation. Skip has the same responsibility as the rest of us to do his own due diligence.
Mineral Joe said:
Skip,
since you seem to know your way around COGCC then you should have already noticed the wells as they are getting further from Jake and closer to your minerals and how production is not proving to be economical for most of the wells. This would have been one of those where you probably lost the time to sell as most buyers have pulled out of buying Niobrara and operators are pulling out also. Too many on here of MRF say never sell your minerals but in your case they will probably have cost you hundreds of thousands of dollars had you listened to them. Good luck finding a buyer and if your lucky enough to find one I know he won't be offering the $2000+ per acre you could have gotten.
Actually I never expected any given value. It was just a question. I have no clue as to whats minerals property is worth. I am aware that Noble in April 2013 announced it will be investing 1.7billion in northern Co which they stated in the report was 45% of thier investment assets. So it just make one wonder.
Cut people slack who give poor uneducated advice that affects people's decision on their financial future you say, I buy from bankruptcies every year from people who made such decisions in their life and I also pay towards welfare every quarter. I never even thought if he were serious about six figures or would have accepted $2k per, never gave it a thought like you believe I did, I just know what is going on in Weld County with Noble, other operators, Niobrara and price of minerals in multiple counties of Colorado the past 10 years so I am not blowing smoke and unlike anyone else here have worked hands on in every aspect of the oilfield over the past 38 years. I myself lost a small fortune because I didn't sell before the Niobarara fell thru and everyone who would have listened to the advice to never sell also lost out for probably generations to come. People listen to others, that is why they are asking for advice. They don't do the research or due diligence as they are perhaps unable to because they don't know what to do or how to do it. What you say has a great impact on their decisions. Buyers don't always know what the future holds as many say here that they are stealing from you, they are many times just making an investment and hoping it turns out well but many times get burned just like any other investment. There are no guarantees in life.
Noble would be one you'd want to be leased to in Weld county as they are not afraid to do a J Sand or a D Sand. Most of the others that are left are stuck trying to do only Niobrara which isn't working out in most areas.
So whatever became of the the well in Cheyanne County. I saw it started at about 2000 bpd. Did it taper down to
700bpd like Jake did yet. I know these 2 wells are the exception to the rule so far. And how about Jake. Is it still producing
Joe, whatever.
All I need to do is find one case where your advice to sell would be wrong, and then all the fingers could point at you as you are trying to point at so many others.
Joe, you buy and sell minerals, you have a personal stake in whether people believe that they should never sell or not.
Most people don't buy and sell minerals for profit and they surely don't have the broad experience you just said you have, so they are probably selling blind and because they are not in the business of buying and selling, they can't just say they will make it up the next time. If with all your experience YOU can get stung by not selling, what makes you think an inexperienced person will not get stung by selling? Sheesh!
Mineral Joe said:
Cut people slack who give poor uneducated advice that affects people's decision on their financial future you say, I buy from bankruptcies every year from people who made such decisions in their life and I also pay towards welfare every quarter. I never even thought if he were serious about six figures or would have accepted $2k per, never gave it a thought like you believe I did, I just know what is going on in Weld County with Noble, other operators, Niobrara and price of minerals in multiple counties of Colorado the past 10 years so I am not blowing smoke and unlike anyone else here have worked hands on in every aspect of the oilfield over the past 38 years. I myself lost a small fortune because I didn't sell before the Niobarara fell thru and everyone who would have listened to the advice to never sell also lost out for probably generations to come. People listen to others, that is why they are asking for advice. They don't do the research or due diligence as they are perhaps unable to because they don't know what to do or how to do it. What you say has a great impact on their decisions. Buyers don't always know what the future holds as many say here that they are stealing from you, they are many times just making an investment and hoping it turns out well but many times get burned just like any other investment. There are no guarantees in life.
Noble would be one you'd want to be leased to in Weld county as they are not afraid to do a J Sand or a D Sand. Most of the others that are left are stuck trying to do only Niobrara which isn't working out in most areas.
Dealing with a landman can have its problems. Our experience was when we signed our Morgan lease Tom Coulton ( I think thats his name) found us and offered us $7000, then 14,000 and when we told him we knew of some areas getting I think about $4000 per acre a few mile away from the Auction so we countered at $35,000, and he said we were crazy. Then he came back a few weeks later and said we were correct and offered us the $35000. With that we did our own work and within a month we had a lease for $240,000 with someone else.
r w kennedy said:
Joe, whatever.
All I need to do is find one case where your advice to sell would be wrong, and then all the fingers could point at you as you are trying to point at so many others.
Joe, you buy and sell minerals, you have a personal stake in whether people believe that they should never sell or not.
Most people don't buy and sell minerals for profit and they surely don't have the broad experience you just said you have, so they are probably selling blind and because they are not in the business of buying and selling, they can't just say they will make it up the next time. If with all your experience YOU can get stung by not selling, what makes you think an inexperienced person will not get stung by selling? Sheesh!
Mineral Joe said:
Cut people slack who give poor uneducated advice that affects people's decision on their financial future you say, I buy from bankruptcies every year from people who made such decisions in their life and I also pay towards welfare every quarter. I never even thought if he were serious about six figures or would have accepted $2k per, never gave it a thought like you believe I did, I just know what is going on in Weld County with Noble, other operators, Niobrara and price of minerals in multiple counties of Colorado the past 10 years so I am not blowing smoke and unlike anyone else here have worked hands on in every aspect of the oilfield over the past 38 years. I myself lost a small fortune because I didn't sell before the Niobarara fell thru and everyone who would have listened to the advice to never sell also lost out for probably generations to come. People listen to others, that is why they are asking for advice. They don't do the research or due diligence as they are perhaps unable to because they don't know what to do or how to do it. What you say has a great impact on their decisions. Buyers don't always know what the future holds as many say here that they are stealing from you, they are many times just making an investment and hoping it turns out well but many times get burned just like any other investment. There are no guarantees in life.
Noble would be one you'd want to be leased to in Weld county as they are not afraid to do a J Sand or a D Sand. Most of the others that are left are stuck trying to do only Niobrara which isn't working out in most areas.
You could always place your minerals up for auction at energynet.com. I think that would give you a pretty good actual value, since most properties have 5-10 people bidding on them. I watch prices there, and there are always quite a few mineral properties for sale, mostly Texas and Oklahoma, but also quite a few in the Niobrara
Skip Bouvette said:
Dealing with a landman can have its problems. Our experience was when we signed our Morgan lease Tom Coulton ( I think thats his name) found us and offered us $7000, then 14,000 and when we told him we knew of some areas getting I think about $4000 per acre a few mile away from the Auction so we countered at $35,000, and he said we were crazy. Then he came back a few weeks later and said we were correct and offered us the $35000. With that we did our own work and within a month we had a lease for $240,000 with someone else.
r w kennedy said:
Joe, whatever.
All I need to do is find one case where your advice to sell would be wrong, and then all the fingers could point at you as you are trying to point at so many others.
Joe, you buy and sell minerals, you have a personal stake in whether people believe that they should never sell or not.
Most people don't buy and sell minerals for profit and they surely don't have the broad experience you just said you have, so they are probably selling blind and because they are not in the business of buying and selling, they can't just say they will make it up the next time. If with all your experience YOU can get stung by not selling, what makes you think an inexperienced person will not get stung by selling? Sheesh!
Mineral Joe said:
Cut people slack who give poor uneducated advice that affects people's decision on their financial future you say, I buy from bankruptcies every year from people who made such decisions in their life and I also pay towards welfare every quarter. I never even thought if he were serious about six figures or would have accepted $2k per, never gave it a thought like you believe I did, I just know what is going on in Weld County with Noble, other operators, Niobrara and price of minerals in multiple counties of Colorado the past 10 years so I am not blowing smoke and unlike anyone else here have worked hands on in every aspect of the oilfield over the past 38 years. I myself lost a small fortune because I didn't sell before the Niobarara fell thru and everyone who would have listened to the advice to never sell also lost out for probably generations to come. People listen to others, that is why they are asking for advice. They don't do the research or due diligence as they are perhaps unable to because they don't know what to do or how to do it. What you say has a great impact on their decisions. Buyers don't always know what the future holds as many say here that they are stealing from you, they are many times just making an investment and hoping it turns out well but many times get burned just like any other investment. There are no guarantees in life.
Noble would be one you'd want to be leased to in Weld county as they are not afraid to do a J Sand or a D Sand. Most of the others that are left are stuck trying to do only Niobrara which isn't working out in most areas.
within a month we had a lease for $240,000 with someone else.???
Are you saying $240,000 an acre? What well would support that????
The only proper assessment of the "worth" is an appraisal and such appraisals should be handled by geologists and/or engineers with the knowledge and qualifications for making such assessments. And even at that, it is only a snapshot in time as to the "value" as of that date.
Skip, Here's some more to think about.
I'd like to make you aware of a couple of alternatives to selling your minerals outright:
1) Royalty Interest (RI)- When you entered into the lease you conveyed your mineral interest for the term of the lease and in return you received cash and a royalty. That RI has value and you could monetize it buy assigning (selling) all or part of it. When selling part I mean either by percentage or by area. Example A - Sell 1/2 your Royalty leaving you 7% (14 x 1/2 = 7). Example B - You sell your RI in current production and reserve your RI on all future production.
In this way you can hold on to your mineral interest
2) Mineral interest subject to current leasehold - Conversely you might want to sell your minerals but hold on to your RI in the current lease. In this way you'll still receive payments under the current lease but all future leases would go to whom ever bought the Mineral Rights.
Hope this helps and is food for thought.
-David
As an appraiser, boy do I hate Royalty Deeds...Mineral Deeds are great.
It was $1500 an acre at 1/6 royalty for 5 years with no option to extend
T L Shields said:
within a month we had a lease for $240,000 with someone else.???
Are you saying $240,000 an acre? What well would support that????
Thanks David for the input
David Mauz said:
Skip, Here's some more to think about.
I'd like to make you aware of a couple of alternatives to selling your minerals outright:
1) Royalty Interest (RI)- When you entered into the lease you conveyed your mineral interest for the term of the lease and in return you received cash and a royalty. That RI has value and you could monetize it buy assigning (selling) all or part of it. When selling part I mean either by percentage or by area. Example A - Sell 1/2 your Royalty leaving you 7% (14 x 1/2 = 7). Example B - You sell your RI in current production and reserve your RI on all future production.
In this way you can hold on to your mineral interest
2) Mineral interest subject to current leasehold - Conversely you might want to sell your minerals but hold on to your RI in the current lease. In this way you'll still receive payments under the current lease but all future leases would go to whom ever bought the Mineral Rights.
Hope this helps and is food for thought.
-David