Offer to buy in Loving & Martin

Hello all! I have recently received an offer in the mail to buy two separate wells that are producing but don’t bring in that much cash flow and likely wouldn’t have much of an impact on our monthly income. My siblings and I could use the money and I plan on using most of it to hire an Oil & Gas Attorney that we desperately need as well.

One well is in Loving County and has a 2022 appraisal value of $2,570. (The Operator btw is PDEH LLC, does anyone know who the payor ofthis company is, because I’m not so sure we’re receiving payments from that company at all).

The other is in Martin County and has an appraisal value of $50.

The offer is for our percent of ownership for just those two and it’s for $34,927.43

I feel like I’ve read and heard that you shouldn’t accept the first offer you get and that you should look into getting multiple offers. Does anyone have any advice on how to do that? Or does this seem like a good offer that perhaps I should just take right out the gate?

Any advice and/or input is highly appreciated! Thank you!

LoyalRoyal is someone offering to buy your royalty interest or are they offering to buy your mineral interest? Be very careful on the wording of documents, etc.

@Clint_Liles, thank you pointing that out! I’ll have to take another look to see. What is the difference though? I would imagine Mineral Rights is selling it entirely, as in for good, and we wouldn’t receive any more money from said properties at all? Whereas the Royalty Rights would be us keeping the rights and foregoing to Royalty payments? Is that about right?

@loyalroyal it depends on what your ownership % is and the legal description of what you own in. The legal description is important because it provides a good idea of rock quality and also one can quickly figure out if there is any pre-development activity (permits etc) going on using either the RRC or Enverus. I can certainly help if you are willing to share the legals.

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Hi LoyalRoyal. It is almost certain that the companies offer is for “all right title and interest”. They just described the tracts using the well names in the offer letter(s). This means that you will be divesting any and all interest you own from the property on the effective date of the conveyance.

Acquisition companies are interested in purchasing based on future possible returns, which do not include the existing nominal vertical production. This means that they will only be interested in all right title and interest. The exception being letting the owner reserve the wellbore rights to the existing production, which is uncommon as well. That lets you retain the rights to the royalty payments for the existing well(s), but that is all you retain.

If you post the legal descriptions of the properties, or the name that appears on the title, I am sure that you will receive competing offers. It will be a good idea to get a couple of offers to compare.

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Don’t fall in love or put much stock in the county appraised value. That is the value of the existing producers. Gives zero value for additional wells, which is where rubber meets the road.

As gunslinger said, they are offering to buy all of your interest in the tracts. And the reason they know you have the interest in those tracts is because you show up in the tax rolls for those wells.

It might be a great offer. But I’d guess it probably is not.

PDEH = ConocoPhillips

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Hello again! Apologies for the hiatus in responding… and thank you for your responses. I am so blessed and grateful to have have found this forum!

@gunslinger You are correct. The offer says it “assumes all interest in all depths of the associated acreage”.

@IP_Media & @gunslinger - I’ll take any help I can get and truly appreciate you offering.

The property in Martin County is under the Lease Name of Casselman. Legal Description: T1N BLK 40 SEC 32 A-944,778, T&P RR CO/MASSEY H A RRC: 38385 API: 31737694

Loving County has the Lease name of Ross 55-2-46. Legal Description: T&P BLK 55T2 SEC 46 A-1355 RRC 44279 287543 RRC # 287543 API: 30132744

Will that suffice? LMK and THANK YOU again!

Ok, this may seem a bit intrusive, but here’s the deal as I see it.

Cross referencing public tax info…there are multiple folks (kin presumably) who own in both of those leases. Working off last year’s tax value versus what you stated, I’m gonna guess that your current check decimals are something like:

Casselman 32: .000074 Ross 55-2-46: .000657

Which means you have 0.39 NRA in the Casselman (.000074 x 657.4 acre lease x 8) and 3.4 NRA in the Ross lease (.000657 x 653.3 acre lease x 8).

Lets say hypothetically that the Casselman 32 should be worth about $12k/NRA. Its far far smaller so I just glanced at it but lets say its worth $4k+. The Ross lease has activity on it, COP/PDEH/Shell whoever they call themselves just permitted 5 wells in that area (late Aug), 4 of which penetrate your lease. See below. Thats a good thing for you. Obviously none of that shows in your check or appraised value yet.

So…let’s say that is maybe worth $18k/NRA. Times 3.433NRA. Total of $61k-ish. Plus the $4k in Martin/Andrews. So $65k ish.

So, yeah, I’d say that your offer isn’t insulting or outright stealing but its too low. For those assumed decimals.

Good luck

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Hi…we have been approached by Copperhead to lease a property in Martin County. We have done some research and see that the NW/4 of section 36, block 36 t2n is in a highly productive area. We have been offered 5k pnma, 1/4 royalty on a 3 year lease. The question is do you think we can go as high as 25-50K pnma? We own 10 nma.

I seriously doubt you could get 25-50k pnma. I’d guess you can get $10k/nma. I am guessing, its been a while, somebody else may actually know. No clue who Copperhead is, I assume some intermediary etc. Definitely always ask for more. It being Texas there isn’t a ton of downside to just holding out. Bonuses probably go up once they permit wells etc. At that point you are dealing with the operator I’d assume.

Something to think about:

They (whoever, Pioneer or XOM it appears) will drill +/- 10 wells in the W/2 of Sec 36 and 25. At some point. Prob in the next 1-4 years. Those 10 wells will make something like 450,000 bo and 1 bcf each. If you have 10 nma at 25% royalty. And oil averages $70 and gas $4.

Over the next 20 years or so you should get bulk of:

10/640 x .25 x 10 x (450000 x 70 + 1000000 x 4) = $1.4m

Your royalty will generate a LOT more money than your bonus in an area that gets fully developed. Time value of money etc though.

I figured that and already we have been offered 10K. We will most likely stick with 15k or no deal. Thanks for your response.

You absolutely cannot sell without understanding the situation. It is not a random offer for Section 46 in Loving County where the Ross well is located. That was a one-mile lateral in only Section 46. In August, PDEH filed permits for FOUR new 3-mile horizontal wells which will cross Section 46, Section 39 and Section 34. Drilling locations in Section 34 and toe (end of lateral) in Section 46. VJ Ranch-Link 55-2 A #3410 (42-301-36006); VJ Ranch-Link 55-2 B #3402H (42-301-36007); VJ Ranch-Link 55-2 C #3412H (42-301-36008); and VJ Ranch-Link 55-2 E #3414H (42-301-36010). You will not be in the 5th permited well VJ Ranch-Link 55-2 D #3404H (42-301-36009) because that well is only 2-miles to extend off the Ross well. Copy each of these links into a browser and (1) the plat for C, D and E wells will open and (2) plat for A and B wells will open. At least I hope this works. http://webapps.rrc.texas.gov/dpimages/img/6400000-6499999//PR0006458095_0001.pdf http://webapps.rrc.texas.gov/dpimages/img/6400000-6499999//PR0006458004_0001.pdf

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