WHY SELL

WHY SELL?

Is now a good time to sell or a bad time to sell? How much paperwork is involved? How do I know if I’m getting a good deal? These are all good questions. We are here to help answer these and any other concerns you may have, with no obligation to sell. There are no questions too simple or too complicated to ask. When it’s as important as your minerals, you need to know. We will do our best to give you objective assistance from an experienced professional.

Mineral & royalty interests are merely investments or assets – similar to a rental property or stocks & bonds. Here are some common reasons people choose to sell their mineral interests:

  • Cash flow needs, such as a large purchase, medical bills, etc.
  • Estate planning or liquidation of an estate or trust, to reduce burdens to beneficiaries.
  • Eliminate commodity price volatility – your asset value is tied directly to fluctuations in price.
  • Paperwork, accounting and administration elimination – including tax filings, leases, division orders, etc.
  • Change in investment objectives and/or a desire to diversify assets away from depletable to non-depletable assets*.

*Oil and gas assets, like any natural resource, deplete with time. Plain and simple, this means your royalty checks ultimately cease and your ultimate asset valuation is zero. Selling your interest and investing in a nondepletable asset (real estate, securities, certificates of deposits) aids in securing the principal part of your investment.

Factors We Consider When Valuing Your Interests:

Commodity
Price
The market prices of oil & gas are key variables in any mineral interest evaluation, especially if your acreage is already producing. The condition of the energy futures market can also influence value, since this presents the market’s expected oil & gas prices over the coming months & years.
Production
Historic production volumes from any drilled and active wells on your property will drive a strong component of value, since any projected production increase or decline will be best informed by production activity to date.
Operator
Unfortunately, not all operators are created equal. If your acreage is leased but fully or partially undeveloped, the operators who have leased your acreage will influence your property’s value in that they influence the likelihood that your property will be developed. The best operators develop quickly and aggressively, while weaker operators do not.
Geographical Location
For undeveloped acreage, location is a primary factor in evaluation. Location gives an indication as to the geological likelihood of strong subterraneous reserves as well as future drilling possibilities, whether horizontal or vertical drilling.
Tract Size
Larger properties command a premium over smaller properties because they reduce the administrative burden for operators to develop a large area aggressively and greatly increase the propensity for operators to choose aggressive development methods such as horizontal drilling.
Well Concentration
A property with no production or only a single well is inherently more risky than a property which is fully-developed with many wells, because the future production is less certain. Lower risk profile interests command a premium during an evaluation because they can be forecasted and valued with more certainty.