Thursday, March 20, 2014

What Is The 'Going Rate" To Lease Or Sell Mineral Rights?

Regarding leasing mineral rights for an oil and gas lease or selling mineral rights, it is human nature to ask 'What is the going rate in my area?' And the answer is 'whatever you can get.' Not trying to be flippant but relying on a 'going rate' can cost you a fortune. Only luck and fate are really in control. Just because somebody near you got a certain amount per acre doesn't mean you will. There are many factors that come into play. It might even be that you can't get an offer for your mineral rights. Again, each tract has its own certain set of circumstances. I have seen people get an offer, a good offer, and hold out because somebody nearby got more and end up getting nothing because the offer disappeared. The oil business is very fickle, be careful of falling into this trap. And in certain states, such as Texas and others, the mineral owner can effectively get 'cut out' of enjoying royalties for a long time and sometimes forever. It's impossible to cover all situations one might run across. Sometimes, a mineral owner lucks out by holding out for more; just remember than any offer must be carefully considered because it might be the last. There is no rule or law governing what one might get for an oil and gas lease or to sell mineral rights. It's just a free market, so, we are back to the answer being 'whatever you can get!' And, in fact, unlike real estate, prices paid for an oil and gas lease or an amount paid to sell mineral rights is not public information. In certain states, the amount paid for state leases is tracked but that does not mean one can get that same amount for his tract. I wish it were more definitive, but it's not!

In areas with a lot of competition for an oil and gas lease from different oil companies, a rate range is sometimes discernible but it varies widely! Nothing is certain in oil and gas. Also, the smaller the tract, the less leverage one has. It's a huge challenge and impossible to 'know' what is best to do. But try not to fall into the trap of relying on any 'going rate.' As for selling mineral rights, same thing applies, each tract is different and a buyer is going to analyze it with many factors in mind to assess the mineral rights value. With all of this in mind, it's best to consult an expert, someone with many years of experience, regarding value. Good luck!

P.S. Lastly, a 'signing bonus,' a 'lease bonus,' is only one factor to consider. There are other important parts to an oil and gas lease other than the amount paid to sign. If you are not experienced in oil and gas matters, hire a pro!

Friday, March 7, 2014

Selling Mineral Rights In Mississippi

Sometimes one has cash needs for various things in life. An option for landowners and mineral owners (some people only own mineral rights and no surface rights) is selling mineral rights. Mineral rights owners have the right to receive oil royalties and gas royalties from oil wells and/or gas wells drilled on their land or a drilling unit which is pooled with their land. This right has a cash value. It is a lump sum cash settlement for potential future royalties and may be a minor amount or a large amount if in an area with high potential for oil and gas production.

We buy mineral rights to add to our significant mineral portfolio in the United States. Over time, we have made this 'work,' meaning we're not 'in the red' overall because we buy a lot of properties to spread risk. Not every deal turns out good for us. And those lucky mineral owners came out smelling like a rose! It's a crapshoot. Even in large fields where a lot of wells are productive, often, the well does not produce as much as anticipated and we lose money on the purchase. On others, we do well. It works for us due to owning thousands of acres across many states. No particular deal will break us. So, the reverse of that is a mineral owner having one tract... that is having all your eggs in one basket. Some people choose to sell to take the sure thing -- cash. It's also possible, depending on size of the tract, for us to buy a portion of what one owns. You can sell and take the cash for the part you sell and gamble on the rest that it turns out good down the way.


We might be interested in buying your mineral rights in any part of Mississippi. If they are producing, meaning you are receiving oil royalties or gas royalties, you can sell oil royalties and we can definitely buy them. If non-producing, give us a call, as well, we might be interested. At this time, we are primarily interested in areas which have some potential for the Tuscaloosa Marine Shale. Several oil companies are interested in the area and have acquired oil and gas leases and have drilled some wells -- Encana, Goodrich, Halcon, Sanchez, EOG, etc. This potential fairway lies in southwest Mississippi counties and we are primarily interested in Wilkinson County, Amite County and Pike County. Possibly a bit of southern Walthall County. Our focus at this time is for those who wish to sell Amite County MS mineral rights and those who wish to sell Wilkinson County, MS mineral rights. If you are interested in selling mineral rights in Mississippi, please give me a call, I'll be happy to work with you on it.

Another site with much information is this mineral buyer site and also this site about mineral rights and selling oil rights / selling gas rights.