Owner just turned 90, and she’s wondering whether to sell mineral rights. We have shares in three producing vertical wells in Section 18. Can you give us a sense about prospects for the future on this eastern edge of the Permian? Activity seems to be heating up, but I wondered if pipeline capacity is restricted?
Just a suggestion, but unless she needs to sell, she might want to pass it family. Her tax burden is likely to higher from a capital gains point of view. If she passes it on in a will, the persons receiving it get a step up in value and if they sell in the future, the capital gain tax (after a year) would be lower.
Thank You, M Barnes. Good advice. she inherited the Rights in 1975, so cost basis is around zero. Thing is-she’s not planning on passing anytime soon.
This link http://wwwgisp.rrc.texas.gov/GISViewer2/index.html?api=22736938 will open the RRC map viewer on a well in your friend’s section. Use the vertical bar magnification slider on the left side of the map to zoom out a bit and see two permitted horizontal wells terminating on the north section line of Section 18. And, depending on her income, it appears what she might pay on a long term capital gain could be as low as zero https://www.bankrate.com/investing/long-term-capital-gains-tax/ Get a learned opinion from a CPA before moving forward.
There is some horizontal activity near your friend’s tract. However, since the wells holding your friend’s lease are owned by Apache, it will probably be difficult for any near term horizontal activity to take place due to their lack of new operations in the area. It does not make financial sense for them.