Do you have a well drilling or is a well planned on the land in which you own an interest?

This time period is very interesting because during the actual drilling of a well the value of your royalty interest enhances-in effect is added to - the base mineral value.

Of course, the critical question at this time is, "Will the well be productive at all and if so will it be a good producer?"

If the well is completed as a good producer the increase in the mineral value can be a multiple of the value before drilling. Much of the risk is reduced and the value of the interest can be calculated from the results of the well.

If the well is a dry hole or poor producer then the value will drop back to a base mineral value, and that base mineral value will be diminished because unsuccessful drilling has taken place. Much of the value available during the drilling period is generally lost.

For this reason, during the drilling it may be prudent for an owner to sell at least a portion of the interest depending on the risk a person is willing to take. The values are at the highest point they can reach without a well actually being proven to be a producer.

Depending on the area, even with the use of the latest technology, the risk of the well being dry or marginal are very real. Oil companies manage that risk by spreading it over many wells and drilling prospects. The option of spreading this risk is not available to most mineral owners making it a one well proposition – the well on your tract either will or won't be successful.

Royalty and mineral purchasing companies- like traditional oil companies -also spread their risk over many wells knowing that a portion will be money losers and a portion will be productive and make money. Many times a prudent approach is to sell a portion of the mineral interest during the permit or drilling period. Harrigan Energy Partners, Inc. specializes in investing in wells permitted or being drilled. We analyze the prospect and will pay the maximum we can giving credit to the drilling value.