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Texas Royalty Activity Jumps

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Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Apparently investors are starting to get on oil/gas production again. Got 4 separate offers for mineral interests we own in the last week. If appraising in areas with production, just watch if minerals are involved. No interest from a year ago now equates to a lot of interest in minerals now.
 

Meandering

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Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
I think I read someplace that OPEC is going to stop shipping oil to us, and other places. That opens the export market for us to drill baby, drill.

.
 

George Hatch

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Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Maybe buy more oil from Argentina to help stabilize their economy.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
It might stay above $40/barrel, but I wouldn't expect much more. When I leased a new car, it got 24 mpg on 4-cyc turbo, 300 hp, and weighs 5000 pounds (mass wins in a crash), so I'm not expecting $5 gasoline. $40 oil also puts Putin in his place since his economy is based on being a large gasoline station.
Oil.JPG
 

Terrel L. Shields

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Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
The pathetic boom is driven by investors stretching for yield and hedge funds betting oil prices push above $60/bbl. So where are your minerals? W. Texas is insane and now I see prices skyrocket in South central OK, so north of Dallas should see play activity. Two issues for US oil that no company can overcome. First, there is too much oil in storage. Second, much of that "oil" isn't oil rather it is light liquids (aka wet gas) such as propane, butane and pentane. Too light to refine, it is blended with thick "heavy" oil from Canada and elsewhere- mainly overseas while we export as much as possible at huge discount. Expecting OPEC to fix our supply issue is nuts.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
My mineral are in N and E Texas. Heavy on natural gas and distillates. However, what they are offering for producing minerals is stupid low compared to what I received last year for a 5 year lease.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
s stupid low compared to what I received last year for a 5 year lease.
In Blaine and Garvin County some investors (not actual oil companies) are paying up to $30,000/acre and lease bonuses up to $11,111 (Lierle report) and $8,000/acre is very common
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
How is such a lease structured
Leases have very difficult to analyze. Prior to nat gas deregulation, leases were typically a lease bonus, a term (usually 1-5 years), a royalty (1/8th to 3/16ths gross proceeds, rarely more), and various clauses, but if production isn't established within the term then it reverts back to mineral owner. Price based at the well head. After 1992 or so, deregulation allowed companies to market gas directly so a gas well might sell gas from Texas to NYC. They were allowed to charge the royalty owner the prorated cost to transport, and expenses to treat and compress the gas which they deducted from that 1/8. The royalty might suffer deductions of 50% or more in old wells, and I recently saw where a charity had three wells out of fifteen with negative cash flow and the charity actually owed the gas company money for their own gas...go figure. The royalty owners are being systematically swindled by forcing them to be subservient working interest partners. This has resulted in numerous lawsuits but changing law is almost impossible as ledge sees oil Co's as ready cash cow, not concern for mineral owners which they seem to think are rich in any case. They aren't. The total income last year for an estate I just appraised was $1,100 and the last four years totaled $4,000+-.
 

leasedfee

Member
Joined
Oct 14, 2007
Professional Status
Certified General Appraiser
State
Colorado
The total income last year for an estate I just appraised was $1,100 and the last four years totaled $4,000+-.
Thanks for your knowledge. How many acres might this be? I'm guess that is after the up-front bonus?
Excuse my city slicker extreme ignorance I was thinking somethin' more along the lines of Beverley Hillbillies or Dallas. :);)

Come and listen to my story about a man named Jed
A poor mountaineer, barely kept his family fed,
And then one day he was shootin at some food,
And up through the ground come a bubblin crude.
Oil that is, black gold, Texas tea.
Well the first thing you know ol Jed's a millionaire,
 
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