We received an offer to buy our mineral rights around the Winfield Ranch near Fort Stockton at $191 per acre. Seems a bit low but our elderly family could use the money. Any suggestions on how to get competitive bids and if the price is reasonable?
Contact one or more of the resources in the MKT PLACE section of this website. Hilltop Royalties is one of the companies in said section of this forum and, in my opinion, Hilltop Royalties has a very high degree of knowledge and integrity. [The blue words above are linked to their respective websites.]
Not sure exactly where that is, but it sounds like a joke of an offer.
Hi Sam -
I tend to agree with Wade Caldwell, that seems to be quite a low offer. Wade is a very experienced Oil and Gas Attorney and one of the Sponsors here on The Forum. His opinions carry some weight.
If you will tell us your legal description(s), one or more of us can look your area up and (hopefully) provide you with more information that you might have at your disposal at present.
Hope this helps -
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
Sam, if you're talking about the Winfield Ranch SE of Ft. Stockton, I know that area. This part of Pecos County has definitely picked up activity-wise this year. Operators such as Oxy, Forge and Periscope are having great results on new wells very close to y'all. I agree with Wade, that offer is a joke.
Charles, thank you for your email. A fixed 1/32 royalty section 1, block 132; a fixed 1/32 royalty section 2, block 132; a fixed 1/16 royalty section 16 block 132 and a fixed 1/16 royalty section 2, block 172. Each section is about 650 acres, total 2614 acres. Thank you, Sam
Sam-
I was assuming that was $191 per net mineral or royalty acre.
Do you need any further information?
I don't, not right now. I'll take a look at your Sections.
One thing I might point out is when you say "a fixed 1/32 royalty" or "a fixed 1/16 royalty", that may be. But it depends upon the wording of the reservations or deeds creating your royalties.
I'm sure many others here on The Forum can explain this more accurately, especially Wade, who is an Oil and Gas Attorney, but true "Royalty" is considered to be 1/8th (12.5%).
I'm not certain if that is based upon law or tradition, but 1/8th was the royalty reserved in the older leases.
When someone reserves or sells a 1/16th, that can either be "fixed" as half of the 1/8th or it can be interpreted as half of whatever royalty is reserved in any future lease.
If your current lease provides for a 1/4 royalty, you may actually own 1/8th royalty, not 1/16th.
Or you may actually be "fixed" at 1/16th and the owners of the mineral rights might receive the other 1/16th and the additional 1/8th reserved. Older leases with 1/4 royalty reserved would sometimes state that the additional 1/8th reserved was an overriding royalty in addition to "the" royalty.
Either way, $191 per ANYTHING isn't worth responding to in West Texas.
Here you go, Sam!
There have been a good number of conventional wells drilled in your area over the years, but only one of them struck me as particularly noteworthy:
The Forge Energy UL 23 Curiosity No. 1, which was first completed in November 2013 at 53 Barrels and 73 MCF, but then re-completed two months later at 788 Barrels and 1,803 MCF.
There have also been a few unconventional (horizontal) wells drilled in your area, but only two of those caught my eye:
The Forge Energy - UL Curiosity No. 2H, which came in September 2016 at 388 Barrels and 670 MCF, and
The Periscope Operating Cunning Wolf UL No. 1903H, which came in last June at 870 Barrels and 525 MCF a day.
The Periscope Cunning Wolf UL No. 1903H has not yet reported any production (no reports have been required yet).
As of July 2017, the two Forge wells together reported 223.3 Barrels and 1,252.5 MCF.
There is a lot of additional factors to take under consideration, but as close as these wells are to your lands, I would venture that your interests are more than likely worth more than anyone has offered you so far.
I would also venture that as time goes on and additional horizontals wells are completed in the Wolfbone (Trend Area) formation in your area, the value of your royalties will go up. Perhaps substantially so.
If your family could use some money now, that's always a driving factor. But you might want to consider only selling half or one-quarter of your interest now. The rest might be two or three times as valuable in another 5 years.
Hope this helps -
Charles
50-SAMJOSEPHINTSAREAMAPwMU.pdf (87 KB)Charles, thank you so much for the valuable information. Sam