Net Mineral acreage value and potential royalty profits

Texas Mineral Rights Reeves County, TX
1

We are looking for the best approximate value for mineral acreage in:

Reeves County, PSL Survey, Blk: C18, Sec. 8 of approximately 442 acres, more or less.

We have had several several offers and have heard values anywhere from $7,500 to $20,000 per net mineral acre.

Also, what is the general going royalty values for the best production in this area?

Thanks!

Don & Linda Harris

2

"Value" in acre as to mineral rights is my guess but define to LEASE or SELL...? I am looking for many of the same answers to your general question. Maybe being a Sunday we got some folks checking in on their off day!

3

Would like to find out comparative price for leasing and/or selling 442 net acres. Also, once royalties begin to come in, is there a standardized price there or does that vary according to well output?

4

Don, Linda & JT -

You all appear to want to know what the best offers for Lease Bonus Rates and Sales of Mineral Interests are in your areas. That will vary from area of Reeves County to area of Reeves County, but someone of The Forum should be able to come up with at least an idea.

Your question(s) regarding "general going royalty values", however, is/are a little confusing. Can you please clarify what it is you want to know?

For example, it is a question of the value or "going rate" of Royalty Interests that are presently under production?

5

I’m not sure this is relevant to your discussion, but I have some minerals in C-8, Section 26, just to the south, and was offered $21,000/nma in the last week.

6

Thanks for this info. Will follow responses for best lease offers in that area as different replies to the discussion are posted.

Yes, sorry for the confusion, the question is the going rate/range of royalty interests that are presently under production.

Thanks

7

LInda -

Until the advent of Unconventional (Horizontal) Drilling in the areas of the "Lower 48" where Shale Deposits are located, you could generally depend upon one of the simpler calculations for the value of Undeveloped Mineral Interests or Developed (Producing) Royalty Interests:

You could see "3 times" the most recent Lease Bonus / NMA Rate for undeveloped interests as a beginning point for negotiating a selling price, or take the average of the most recent 3 months of Royalty Income from a property and multiply it by between 36 and 60 months (3 to 5 years) for developed (producing) properties.

But the World is not that simple anymore, especially in the Permian Basin. In some areas, a single formation can be as much as 900 feet thick.

If you have 442 NMA anywhere in Reeves County, presently producing or not, you need to consider engaging the services of an extremely experienced Oil and Gas Attorney to assist you in wading through the myriad offers you are receiving or will be receiving. And, perhaps just as importantly so, be willing to spend the money to have an experienced Petroleum Engineer prepare an evaluation of your properties.

I have not yet looked at your Section 8, C-18 yet and do not at the moment have any information about "Going Rates" in the area (other than Linton's offer of $21K per acre for her property, which is about 5 miles South of you and pretty impressive), but I have heard of acreage in Northeast Howard County, which is waay East, Northeast of you both, something like 5 Counties further out, going for $62.5K per NMA.

I don't know how to advise either of you further at present.

I've been thinking of Mapping Out what Lease Bonus' and Offers for Mineral and Royalty Interests have been over the course of the past few years in West Texas: Where, When and how much for what...

Appreciate your faith in me -

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

8

Thank you so much for your informative information, detailed history to present and suggestion to get professional help! It sounds like we need it!

I will like to follow up with you Tuesday or Wednesday. Will I find your phone # online?

Thanks!

Don & Linda Harris

9

You might find my contact information online. People who have Googled my name tell me that they have, but that has always been news to me.

You most definitely do need professional assistance. Much more, perhaps, than I or anyone else of The Forum, to my knowledge, can provide you.

One of The Forum's greatest graces, however, is that it frowns upon solicitation by people "In the Industry", of which I am. And I absolutely and completely agree with The Forum's bead on that and will never position myself otherwise.

I do not feel comfortable doing so, but if you will Click on my name in BLUE above and invite me to become "A Friend" on The Forum, we can have a more private conversation and I can provide you with my personal contact information. It will still be on The Forum, but more private than in this, the General Web Page.

As far as I know, Pat Malone, Elizabeth Alford and Kenny Dubose are the current Monitors of The Forum. They are all very fine and quite knowledgeable people.

They are, of course, quite welcome to monitor any of our conversations.

Hope this helps -

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

10

are we talking to lease an acre as in a 3 year type deal or to sell outright an acre surface and mineral ...?