I could as an alternative, invest the $3000 an acre lump sum, up front in the stock market, and even lose it all. Even those of you who bought EOG at $140 have seen a real drop in your asset the last several weeks, for now, anyway. Nothing is certain.
Reporter: "What do you intend to do with all the money you are receiving from your newfound oil royalty checks?" Farmer-Royaty Owner: "Well, I don't plan to change my lifestyle. I think I would just like to try and keep farming, at least until the oil royalty money runs out!" On Oct 4, 8:54�am, elwood <[EMAIL PROTECTED]> wrote: > lots(most ?) lottery winners take the lump sum which is about 1/2 the > 20 yr payout amount, in spite of the tax consequences. �money has time > value. �and a bird in the hand ......... and all that. > > a few years ago, the rule of thumb for buying a depleting resource > like oil and gas minerals was about 4 - 5 yrs current net income. > working interests were going for about 3 yrs net income. �oil and gas > interests have gotten a lot more expensive since then. �the last time > i participated in an auction, minerals went for about 2x that amount. > > imo, there are some owners who's best option would be to sell. and if > there are any widows and orphans out there ......... > > On Oct 4, 7:12�am, David <[EMAIL PROTECTED]> wrote: > > > > > go-devil...what is going on is that a lot of these companies are > > targeting people who have wells at the permit, drilling or even in > > production but confidential stage and not yet sending out toyalty > > checks (usually these begin 6 months after production begins or more) > > It's pretty easy just by looking at �information from the field to > > determine if a still confidential well is likely to be a strong > > producer or not, based on secondary info such as watching the > > truckloading traffic, the size of the flare indicating pressure etc > > etc, even when the well is not producing royalty checks. However, many > > of the people targeted with these letters live in other states and > > this cannot easily go out and look at what is happening right at the > > well. > > > These mailings go out in mass by these companies, much like spam email > > goes out. Generally they go out after there is little if any risk that > > the well will be a dry hole. �There is indeed nothing illegal about > > that. �A lot of mineral owners have no real clue as to what the size > > of their royalty checks might be until they actually have the > > experience of seeing the first check. (I have been trying my best to > > assist people who want help �here in doing the calculations they need > > to do to get at least some estimate this, by the way, and will > > continue to do so.) These people quickly do some calculations based on > > the per acre offer and the number of mineral acres they own and > > conclude that they would receive a 5 or even 6 figure check right now > > instead of still totally unknown monthly royalty checks. This is like > > participating in the TV show "Deal or No Deal", North Dakota style. > > > Further, these letters often end up in the hands of people who have > > lived all their lives without much money, and elderly people nearing > > the end of their lives, who are thinking that they may not have time > > left on earth to enjoy a long series of monthly royalty payments, and > > these people may have a real reason to want a big check right now > > instead of a stream of monthly checks. > > > The companies do their mailings based on the notion that MOST people > > will not take them up because they will get several times more money > > total if they collect the streamof monthly royalty payments, but a few > > will take them up on the offer, and the few that do take them up on > > the offer (cash now in exchange for a potentially long but also > > potentially variable stream of cash from the royalty checks) make the > > acquisition companies enough money to pay for the nextt round of > > mailings (including return postage stamps) plus a whole lot more. > > > I've been trying to figure out what the company mathematicians are > > expecting in terms of a stream of revenue over time based on their > > recent up front offers. I conclude that if you get any $3,000 per acre > > offers, that is good reason to believe that their calculations have > > been done for a hum-dinger of a still confidential well. > > > This is starting to sound a little like a J.G. Wentworth commercial. > > J.G.Wentworth buys annuities and structured settlements set up to make > > long term payments in exchange for a lump sum now to the previous > > owner too, and makes money because the up front cash offer is > > substantially less than the discounted value of the payments over the > > life of the annuity or structured settlement. (It's YOUR money, why > > not use it (blow it all) now (...instead of taking the tiny monthly > > payments until you are dead and then the relatives you don't even like > > get to blow what's left instead?..sorry, they didn't actually say that > > but surely hinted at it ). Then there are the people who get so much > > satsfaction from living the high life today that they may not be much > > concerned about what could happen at some point in the future. > > > I have no problem with people who with eyes wide open and brains fully > > operational choose to take the cash up front because they need or > > would like the cash and would rather have the lump sum of cash now > > instead of the long-term stream of payments. Where I do have problems > > is when people sell mineral shares with their eyes less than wide > > open, and end up cutting a deal that gives them very little total $ > > relative to the $ stream of monthly payments they otherwise would have > > almost definitely received. If the well hasn't been drilled yet and > > there is a real risk associated with whether the well will be a good > > producer or even a producer at all, �the lump sum now may look quite > > enticing. Of course, if any of that risk exists, the offer is not > > going to be $3,000 an acre either. > > > But the part that really bothers me and what seems to me to be a form > > of a scam is that these companies now instead appear to be targetting > > people with wells at least in the drilling and perhaps in the early > > production stages but before the royalty checks come out, and without > > any real knowledge about the still confidential well production or > > even a crude (no pun intended) estimate of the royalty checks, some of > > these people might nibble at an offer that within the space of a few > > months they will surely regret. Of course, if you sell all the mineral > > rights for a lump sum, you will not be receiving monthly royalty check > > and you will probably not even know what you missed out on. > > > David- Hide quoted text - > > - Show quoted text - --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Bakken Shale Discussion" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/bakken-shale-discussion?hl=en -~----------~----~----~----~------~----~------~--~---
