Oil land valuation

Discussion in 'Commodity Futures' started by BlackBison, Mar 29, 2008.

  1. Hi guys,

    I am a financial futures trader, not an oil trader, but i would like to ask any oil fundamental researchers a question. Sorry if this is not about trading, i dont know where else to ask!

    I have googled this many times and cant find anything.

    My family may well come into some oil land- that is around 9 acres of land which is part of an oil field in the west indies.

    This land is currently paying a 35% dividend to the owners with the drilling co keeping the rest.

    It is a relatively stable and safe country and the oil has only been drilling for under 20 yrs so hopefully wont be running out anytime soon.

    1) Does anyone know roughly what this land might be worth per acre? Just ballpark figures in USD would be great.

    2) Does anyone know if the 35% dividend payment is a fair split. Surely the owners of the land should be getting 50%+ since they are the ones with the asset!

    Obviously we would be getting valuations etc if we got this land (its complicated its not a done deal), but i was so excited i had to try and find out now if possible i cant wait a couple of months! :)

    thanks in advance,
  2. nevadan


    My experience with royalties is only indirect since I have never received any money personally from an oil well,:( but 35% does not seem out of line. You should remember that the oil company put up the risk capital to drill the well in the first place and has operational, maintainence, and transportation costs in the present. If the production records are reliable a bigger concern would be taxes, imo.
  3. Daal


    you need to tell us how many barrels exist on the property and look how the market tends to value oil reserves
  4. The company that is producing the oil should have geologic and reservoir engineering data to estimate the remaiing reserves. Also if your land is part of a producing unit, wells on you land could quit producing and you would still receive royalty from the unit production. You need to do a little research on how it is set up.