Thursday, May 27, 2010

Why Sell Mineral Rights

Many mineral rights owners face the question: Why sell mineral rights? Should you? Or not? This question has come up a lot in the past couple of years with the announce of another shale play. Here are a couple of important shale plays:

The Eagle Ford shale is in south Texas, in a broad area from Gonzales county to Webb county. A couple of years ago, Petrohawk brought it to the newsfront with announcement that drilling had paid off there and they were enthused about it. Since then, much oil and gas leasing activity has occurred and more drilling, as well. It appears that production is not as strong as in the Haynesville shale, but, it's still good. Here is more info: Eagle Ford shale.

And that means that mineral rights owners now face the first question listed above. Because any time an oil play or gas play is announced, mineral rights sales can bring big money.

There are many reasons one might want to sell all or part. But the main reason it's prudent to consider it is that cash money is a sure thing. And oil and gas exploration is anything but that. Over my 32 years in the oil and gas business, countless times, I have seen people reject an offer to sell that would have done them good, even made some wealthy, and then something went wrong and the offer went away. And they couldn't get much at all after that. Sometimes, zero. And that's pretty sad! I have seen people turn down million dollar paydays and a week later, they couldn't get a penny for the same property. Oil and gas is a fickle business and things change rapidly!

The Haynesville shale play (see Haynesville shale map) is one such play. Wow, a lot of good stories and sad stories, too! Some people got fortunes and some people lost them!

So, if you own mineral rights (which include royalty rights), it's wise to consider it. Follow the links on this page for more info.

Sunday, May 2, 2010

Value Of Mineral Rights

There are many factors in a mineral rights valuation. There is no simple answer. For purposes of this blog, we will deal only with the value of oil and gas. If you have coal in your area, that's a another subject.

As for oil and gas, are your mineral rights in a region where oil and gas production has been found? If not, the value of your minerals is not very much at all. If you're minerals are in an oil or gas producing region, it could be substantial. In some areas where there is a shale play going on, you could reap a large payday, indeed. Mineral rights buyers such as Payday Minerals have paid out millions of dollars to some lucky mineral owners.

Another factor is whether you have an existing oil and gas lease on your property. And, if you are already receiving a royalty production check, that can affect value, in either direction. It's quite a complicated formula but the good news is that mineral owner doesn't have to figure it out. Here is one explanation of how to sell minerals.

Mineral rights buyers are gamblers. Oil and gas exploration is a very risky business and it's quite a roller coaster ride. If the price of crude oil and/or natural gas goes down, the income or potential income from mineral rights will go down, as well. So, other than cash, nothing is a sure thing. Companies who assemble a mineral rights or a royalties portfolio spread their risk by buying thousands of acres across many tracts. This way, if one goes bad, it doesn't hurt them so much.

And again, if your mineral rights are in one of the shale plays, such as the Haynesville shale, Eagle Ford shale, Colony Granite Wash, Niobrara shale, Marcellus shale, Fayetteville shale or Bakken shale, your minerals could be worth a small fortune, or a large fortune, depending on how many acres you have.

In future posts, other aspects will be covered. There is quite a lot to it!