I received a tax notice/bill in 2019 and went through the protest process with CAG. After some time and many back and forths, the appraisal was reduced by about 40%. I paid the tax in December 2019. I did not receive any further notices from RCAD until mid-2021 when I got a “zero” valuation notice for 2020.
However, last week I received another valuation for 2020 this time indicating the “taxable value” at exactly $1000 per acre. It appears the appraisal was done simply by multiplying total acres by $1000. Whether this is by design or default is anyone’s guess. The appraisal is about 20% of the initial first appraisal after the well began producing in 2019 The potential tax liability is about 33% of what I paid in late 2019.
The notice indicates I have until March 24 to appeal/protest. There is an additional piece of paper indicating I can access my account via CAG’s website using registration and login numbers they provided. The appeal must be in writing. I’m confused and wonder if it is worth my time to appeal/protest?
CAGI is a responsible appraiser and absolutely does not value wells at any flat rate per acre. It is an economic engineering calculation base on multiple factors, including the decline curve of the well, anticipated economic life of the well, average oil price and average gas price for the well over the prior year (2019 averaged prices applied to 2020 valuation). This is the same process used by all the appraisal services. On the CAGI website, you can access the Mineral Work Paper Allocation which details the prices, discount rate, decline curve, etc. for each well for each year. If the well is still producing and you did not get a 2021 tax bill from Reeves County, then you should expect a 2021 tax notice from CAGI as well. It looks like CAGI is using an economic 35 year life for most of the wells which greatly increases the valuation. Hopefully the operators will get that reduced to more realistic life which will reduce the taxable values.
Thanks TennisDaze. It must be a bizarre coincidence on the valuation as it is exactly my acreage X $1000. If I understand what you are saying about the 35 year life, should I appeal my valuation using that as part of my argument or let the operator EOG take on the appraisal district? Also it basically states this is an estimate and I will receive a final bill later in the year. Which could be higher?
Just an update. We have been working through our notices. We have not found any so far that were billed or paid in 2020 or 2021 that they are trying to come back and assess values on so they can bill and collect a duplicate or an increased amount. The process is not complete.
It looks like our bill for the wells they missed will be more than what they did bill and collect on. Makes you wonder how the taxing districts stayed in business.
I notified Reeves CAD they had missed wells, several times, and was told not to worry about it because the wells had a $0 value.
The notices recently received were only for wells for which we were not taxed in 2020 or 2021. However, looking at the CAGI website, there are more wells being added each day for which no notices have been sent out yet. Several of these newly added wells are one for which we paid taxes in 2020 and 2021. The question is whether CAGI is building a database for 2022 for all the Reeves wells or whether CAGI/Reeves plans to send out notices for all these wells. The CAGI website has 2 columns, one labeled “assessed value” and other called “Noticed”. The Noticed column has matching value in assessed column if notice has been sent and a $0 value if notice has not yet been sent. This is something to keep an eye on.
Surface taxes - Reeves assessed and billed normally, using the traditional comparable sales approach, but dramatically increased surface assessments in 2021, said they were “catching up” after long period of no increase.
Mineral taxes. Mineral valuations are always income approach using a discounted cash flow spreadsheet. ReevesCAD outsourced minerals valuation to Capitol Appraisal Group in 2018 and 2019. Inexplicably, ReevesCAD attempted to assess wells in-house in 2020 and 2021, resulting in operational fiasco (see bulletin on website). Reeves fired the assessor in 2021 and shipped the data to Capitol. The goal was for Capitol to assess Reeves (2020 & 2021) minerals by January 2022 but deadline was missed. Capitol is now mailing many 2020 and 2021 assessments, but they are not finished, we have not yet received ours. Capitol said they are only reassessing 2020 and 2021 in this round, not 2019. Capitol told me they normally send assessments to the operator before sending to royalty owners, so that valuation differences can be resolved between Capitol and operator in advance of mass-mailing to royalty owners.
Capitol said they haven’t sent us notices probably because of delay in procuring/downloading our operator’s division order.
Good summary by Roy. We completed the review of our notices and they were all on wells they had failed to bill for. We are probably going to protest because the short notice period does not give us comfort our operators are going to protest, plus we see some questionable values.
Here’s an interesting article in Texas Land magazine, Land Market Shifts Into Overdrive , by Dr. Charles Gilliland of Texas A & M (used with his permission). See the ‘Far West Texas’ paragraph. It confirms the faulty logic for land appraisals in Reeves County.
The appraisals went out at the end of February or early March and the deadline to protest the appraisal was March 24. If you didn’t get an appraisal, you likely won’t get a bill. You could call the appraisal company in Austin and ask them about it. I only received appraisals for one well and the person I spoke to at CAGI said they didn’t see the other well. I have tried looking it up on their website, but even with the lease number it doesn’t come up. I guess that will be an unpleasant surprise for next year!
I haven’t received an invoice for my minerals on 2 wells yet, so I presume they’re still working on them. These are minerals I’ve been taxed on in the past, not new wells. The tax office is clueless because she insists all the notices have gone out. It’s good to get reassurance that I’m not the only one.
Just received the appraisal for 2022 Monday. lncreased from 45,000 to 162839. Didn’t waste time and mailed the protest forms today. Deadline is May 17.Seems quite extreme. Property is Blk 13 NW 1/4 sec68. We will see what happens. As always,thanks for the forum.Charlesj
Mineral appraisals tripled for our four wells over last year, which had jumped between 400-800 percent from the year before.
However, I do have concerns about their system. I know RCAD went back to Capital Appraisal Group (CAGI) to hand minerals after a previous RCAD administration screwed up royally. The appraisal I received in the mail was addressed to my mother, deceased in May 2020. The deed changes were completed by October 2020 and we received first Apache royalty checks in November 2020. I apprised RCAD of the change and in May of last year received appraisal, still addressed to mom. Contacted RCAD again and they sent me an email with appraisals for each of the heirs, but we never received a proper appraisal from the district.
Contacted RCAD again this year and they directed me to Chandra at CAGI. Chandra referred me to Kenneth Hitt neth@cagi.com. No word from him yet after a week.
My concern - being a systems person I become nervous when there are inconsistencies. The fact that in one system, the system that generated the letter to us this year and last reflected incorrect information. While in another system, the “correct” ownership information was available they were able to pretty quickly generate a “correct” minerals appraisal via email only (never received a proper appraisal). That appears the case this year as well and CAGI is slower to respond.
CAGI should be using the royalty DOI from the operator’s list. You can pull the CAGI workpaper(s) for the wells for 2022 valuations, but may be using an older Apache deck. You can send a copy of the deed into the heirs and one copy of your Apache check with your DOI to Kennith Hitt. Even better if you have a check from each heir. Then appraisal notices can be sent to each heir. In the meantime, you should log-in through your mother’s account to get the CAGI workpapers for each well. Look at the effective oil and gas prices which are the basis for each valuation, based on the decline curve. If you are being charged costs, then you should make sure that those deductions are reflected on the CAGI appraisal. The other major factor is the economic life. CAGI starts with 35 years for both physical and economic life. Only the operator can get the economic life reduced.
I am a little lost (not versed) on a couple of the recommendations. However, I have provided CAGI - both chandra and Kennith copies of the deed changes, copies of the statements we received last year via email, copy of the appraisal received under mom’s name.
Just curious, how expensive is it to have someone versed in these affairs file my appeal?