Posted by JerryS on January 14, 2016 at 21:50:10 from (98.80.110.211):
In Reply to: Land purchase update posted by notjustair on January 14, 2016 at 20:24:06:
Just some thoughts to offer some perspective: I paid $3000 an acre for 17 acres of tangled woods and brush; of course for me it was just a homesite. Around here pasture land goes for $2000 to $3000 an acre with no minerals.
I don't know anything about big-time farming so I have no thoughts on the potential return on your investment in an expanded farming operation.
I do know that 10 barrels of oil a day is not an insignificant consideration, even with the current price of oil. The fact that the oil company/landowner is willing to divest this production tells me that they are getting out of the production business in your area, which further suggests that any future production will have to be handled by the new owner--you and/or whoever you hire to service the well and haul the production. It makes no sense that they would sell you the oil with the land and still provide and operate the production apparatus. Are they leaving their downhole and surface equipment there?
My area is dotted with small, shallow "stripper" wells that produce anything from ten barrels a day to ten barrels a month. The main reserves have been extracted, but these wells have been seeping oil for 50 years, and will probably continue to do so for the next 150 years. Nobody knows for sure. As for the natural gas, it sure would be nice to run pipe to provide energy to your farm. Get answers to all the "who, what, when, where's" before you act.
In any case, I'd say go for it. It seems that the worst case scenario would find you being forced to sell it in the future, possibly at a loss, but at least you would know that you gave it your best shot. I think that down the road you'd be bothered more by not taking a chance at all rather than to come up short in what gave all appearances of being a good opportunity.
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