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Old 01-26-2013, 07:22 PM
 
3 posts, read 32,090 times
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Hi there, I am wondering if anyone can direct me in how to understand and figure a legal description on mineral rights or obtain one? My family owns mineral rights in ND, Hettiger County, but we do not own the surface rights.
We want to learn more about this and how to make an informed decision as to the value, etc. Do we have a landman do an assesment? If so, any recommendations?
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Old 01-26-2013, 11:06 PM
 
Location: C-U metro
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My first question is to ask why you are asking for a legal description on your acres? Unless they are less than 10 acres, they should be spelled out on the offer, I'm assuming, you are getting from the leasing company. This takes form of the Township/Range/Section description of the minerals. Something in Hettiger would be like T135N R91W N/2 21. Township 135 north, Range 91 West, North half Section 21.

Hettiger County is south of I-94 so your mineral rights are not in demand now. Cheasapeake did have some exploratory wells south of I-94 but they did not pay out or they would have kept it.

Mineral rights are severable in ND and surface right owners must allow mineral right owners access to the minerals provided the mineral right owners pay for damages caused by accessing the minerals.
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Old 01-27-2013, 07:29 AM
 
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We haven't gotten an offer, my family inherited about 512 mineral acres. What we have a legal description of the land, but not the minerals or the value. I guess my question is, we are interested in understanding the worth of the minerals if we were to lease them.
I do understand the mineral rights are not in demand now, but we are just trying to understand and make sure we have our ducks in a row.
Or maybe we wont know the value unless the minerals are in demand?
thanks for your help and feedback
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Old 01-27-2013, 11:49 AM
 
154 posts, read 357,110 times
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Quote:
Originally Posted by beth7151111 View Post
We haven't gotten an offer, my family inherited about 512 mineral acres. What we have a legal description of the land, but not the minerals or the value. I guess my question is, we are interested in understanding the worth of the minerals if we were to lease them.
I do understand the mineral rights are not in demand now, but we are just trying to understand and make sure we have our ducks in a row.
Or maybe we wont know the value unless the minerals are in demand?
thanks for your help and feedback
They aren't really worth anything if they're not in demand. If you get an offer never take the first one and get ahold of an attorney with experience in the field. Best advice I can give you.
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Old 01-27-2013, 03:49 PM
 
Location: Las Vegas
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I don't know if this would help, beth, but this is the best info I've found on mineral rights in the area.

North Dakota - Discussion Forum - Mineral Rights Forum
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Old 01-27-2013, 06:05 PM
 
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Thanks! that forum is very helpful!
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Old 01-29-2013, 09:29 AM
 
Location: Williston, ND
59 posts, read 119,996 times
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It's hard to place a value on minerals in outlying areas (such as Hettinger County). From a fair market value standpoint (IRS standard), they have very little value (almost none): most likely less than 20$ per net mineral acre.

However, from a fair value standpoint (Market Standard), the value can be significantly different. There are still plenty of speculators buying and leasing minerals in poorly performing areas.

An example:

Some minerals were appraised in the southern part of Stark County. The appraisal was done as a basis for a trust. We appraised the minerals (using the fair market value) at 25$ per net mineral acre. This value was based mostly on projected leasing bonus payments with very little added from potential future production revenue. Wildcat wells in the area, isopach maps, and geological findings indicate that this area is not economical to commercially produce oil from the Bakken/Three Forks. HOWEVER, the big assumption made in a fair market value is that the buyer and seller and both knowledgeable and under no compulsion to buy or sell.

Several months after the appraisal was completed, a well staked a few miles away from the appraised minerals. We got a call from the mineral owner stating that he received an offer to buy his minerals for $700 per net mineral acre! He was wondering why there was such a large difference between this offer and the appraised value.

The big difference is that nothing changed in the reservoir before and after the well was staked. A knowledgeable oil exploration company would still look at all the other wildcat wells and geological information and still pay almost nothing for the minerals. However, people without that knowledge would see a well being drilled relatively close and imagine more wells being drilled in the area.

The mineral owner asked if he should sell. We don't usually give advice whether to sell minerals or not, but in this case I told him that I would if I were in his situation. I have no idea if he did or not.

As expected, the well turned out to be a bust. If he didn't sell, I imagine that the mineral owner is no longer receiving those offers that he called about.

It is fine to get things in order in case there is activity around your minerals, but I wouldn't bother with an appraisal unless you need to for legal/tax purposes.
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