Loving Block 33, Section 84 valuation question

Hi all,

I have 78.425 NMA in Block 33, Section 84 and am fielding lots of offers to buy. Many are lowball fishing offers, but some seem to be approaching realistic amounts. But, I’m trying to figure out how to value it, especially because there are some horizontals and PSA’s we’re party to. A few questions:

  1. NRA should equal NMA x 8 x Royalty Interest. Is that correct?

  2. There is an NPRI on the land. My understanding is that this should be calculated at a 50% reduction of the NPRI for the NRA; in other words, if the NPRI is 1/4, then the NRA reduction for the 1/4 NPRI should be 1/8.

  3. How does one account for the revenues from pooling on a given tract? In our case, this adds some value, but how does that calculate into the NRA pricing? Any way to quantify?

  4. Finally, does anyone have a ballpark of what minerals (we own surface, too) should be valued at in Block 33, Section 84?

  5. And, if we sold both minerals and surface, how much would that change the pricing?

Sorry for all the questions, and thanks for any insights!

  1. Correct.

  2. Possibly correct but depends on exact deed language for the NPRI. They can be created multiple ways leading to multiple ways of calculating the deduction.

  3. Your NRA remains fixed so long as your lease royalty does. You’d have to run out an analysis on future development and production within the pooled unit to see what the estimated worth is.

  4. I don’t.

  5. Should certainly increase the price but unsure how much.

Thanks, TwoShoeBeagie7 - that’s great info and confirmations.

I have a lot of the original deeds for the property. Is there a straightforward way to locate the source of the NPRI and then figure out how it should be allocated per the deed language? Or, is it more of a hunt?

Thanks!

You just have to review the full chain of title as it relates to your ownership. Easiest to start from the beginning and track it to see when royalties were reserved/conveyed.