I recently received an offer on purchasing mineral rights in S:8 T:23S R:28E, Eddy County. My mother owns about 5 NMA. There has not been any activity there in quite a long time so I was wondering if there is something imminent? I am trying to learn about the oil & gas industry quickly as I help my mother manage her interest. Trying to determine if it is better to sell or hang on to it. This forum has been very helpful. Thank you.
I don’t think anything is imminent. At some point people are going to make offers everywhere in prospective parts of Eddy County, and you are part of everywhere.
That is fairly good acreage, at some point it should get drilled with wells. When/if it does, it will make 2x+ the money you are being offered today over the next 5 years and then even more after that. Not the next 5 years from now, the 5 years after when/if it gets drilled. That’s the bet, when/if it will get drilled. Talk to enough bookies to make sure you understand the line, but it’s a bet. Whether or not you want to take that bet depends on your risk tolerance, need for upfront cash, thoughts on future oil price, fun of being in the oil game, etc. Nobody is qualified to tell you if you should sell or hang onto it. I mean they will, but they are not.
I don’t know what your royalty rate there is, but if we assume its 25%, somebody should be willing to pay you something close to $200k for your 5NMA. If its 1/8th, half that. Etc. In my amateur opinion.
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Thank you very much. That was very helpful.