Downtown 4 Lease

By
Real Estate Agent with Keller Williams

Well, it isn't just HOA and Neighborhood Groups that are getting together to negotiate mineral leases.  It was just announced that the Downtown Business District is trying to get all of its members together to negotiate for the mineral rights as one group.  The Central Business District comprises about 800 acres and only about 10% has been leased so far. 

Why are the downtown landowners getting together.  For the Same Reason homeowners do - MORE $$$$ AND BETTER TERMS.   Not really too surprising, is it.  When you look at the potential to have up to 20 wells, yep that's 20 wells, drilled in the 800-acre lease you can see that the potential is there.  Let's say they do drill and complete 20 wells and they are just average wells with about 2.5 billion cubic feet (BCF) per well.  Now you are looking at a total of 50 billion cubic feet over the life of the wells (20-wells time 2.5 BCF per well).  If the owners get 25% royalty they would benefit from 12.5 BCF over the life of the wells.  At $8 per thousand cubic feet (MCF), that's about what it has been running lately, the landowners are looking at a cumulative of $100,000,000 over the life of the production.  Yep, that's ONE HUNDRED MILLION DOLLARS.  And I don't care who you are, that's a LOT OF MONEY.

If downtown business owners are willing to do this it must be something worth looking at.  Maybe this is why so many HOA's and Neighborhood Groups are trying to get their neighbors together.  I am working with my HOA, and the surrounding 3 HOA's right now to work at getting a good lease negotiated for our neighborhood.  We have been offered $3000 per acre as an initial offer and I feel we will be able to do much better if we negotiate well.

When and if you are approached by anyone who wants to lease some valuable rights to your property, STOP AND THINK.   Don't just sign something that shows up at your house.  Get some facts before you act.

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