My mom inherited mineral/oil/gas rights to a little over 2 acres in Reeves County, Texas. Out of the blue, she recently received letters offering her 10K, and then 25K, to buy those rights.
The property is in Section 2, Block 56.
Is 25K a good offer? Should she hold out for more? Is there a lot of activity in this area right now? This is all brand new to me, so we could use help from people who know what they are talking about.
As a fellow owner, I can tell you that itās probably an average offer. I have received offers in the 30s; however, it is dependent on a number of factors that the experts on this forum can tell you about. In my case, an operator has the lease and has permitted/drilled two wells, and they are almost ready to start production.
Good luck!
Has someone approached you to buy or lease? It seems lately people are using the terms interchangeably. My cousin (an older woman with no knowledge of the industry) recently received an offer from a company, and the landman used the word ābuyā when, in reality, he was seeking a lease. The price to actually buy (transfer title to that person) should typically be higher than to lease (meaning someone wants you to agree to an amount with a term and a certain royalty you will be paid upon producing propertyāthis doesnāt change ownership). If anyone responding can explain why people keep using ābuyā when they mean ālease,ā Iād love to know why. 
This is very helpful, thanks Jesse! Out of curiosityādid you negotiate with the offerors at all? It sounds like you didnāt end up selling.
Itās a good question, Camiāthese are offers to buy my mom out of any rights to the landā¦though at some point last year, she also received an offer to lease. She wasnāt interested in the lease though.
As for why people make the mistakeāIām not sure!
In this case, it sounds like they are offering to buy your unleased minerals at $25K/acre. You are in effect selling your lease bonus plus your net royalty acres, of which you should get 2 per acre assuming a 25% royalty lease. To figure out the value, figure out the value of the components. Make sense?
What can you lease an acre for in Northern Block 56, Reeves County, Texas (and get 25% royalty)? What can you sell a net royalty acre for in that area? I would think you are more likely to find people with specific numbers to those separate questions.
I would guess that adds up to around $30K/acre. But like I said, guess. Nobody likes to feel like they didnāt get the best deal possible, but at some point you may just be better off getting $50K out of the blue than spend too much time trying to find a better offer that may not come.
There are no permits in Section 2 right now. Resolute is running a rig in the unit north of you.
Unless your mother needs the money now, she shouldnāt sell. If she leases the land, sheād get a check for $20,000 (more or less) and a monthly royalty check. Granted, this all assumes that the company drills and puts her acreage in the unit. Your mother isnāt going to get rich from either option; however, I would much rather have a monthly check each month than a lump sum payment.
Thanks, Z, this is really helpful as well. My aunt, who inherited something similar, signed a lease but didnāt get any signing bonusāonly the promise of a royalty check if and when they drill. Does that sound normal in your experience?
This is great, N, thanks for your guidance. All of these questions are useful as I do more researchāand seem quantifiable so that I can compare this option to sell with possible offers to lease. I appreciate it!
Modi,
Your auntās lease may have provided for a larger royalty if she chose not to receive a bonus. I see this every now and again; the leasing company will sometimes provide two or three different options for a landowner to choose from.
Clint, this is fascinating, insofar as I understand what I am looking at. Is it your sense, based on the nearby activity, that drilling will likely occur in the near future on this plot? Or in your experience, is it incorrect to make that assumption?
James- 4 years ago my siblings and I received a letter offering us $2500 for our deceased Dadās mineral rights that we didnāt know he owned in Reeves County. The recommendations I recād from a number of people on the Mineral Rights website was all ādonāt sellā. We didnāt.
Today we know that Patriot Resources has drilled on the lot. Awaiting info on what this will mean financially. If you can wait, do. Best Regards,
Mod,
Block 56 Section 2 is surrounded by a number of prolific wells just offsetting it and away from any major geologic concerns. Assuming the land/legal situation is not overly complicated and a deterrent, I think it would be a reasonable expectation that this section will be drilled in the not too distant future.
That said, these things are very hard to predict. For instance, if itās a stranded section far away from the given operatorās core operations, it could take longer despite being great rock.
As a land/mineral owner in that area, know that you will be getting low-ball offers from mineral brokers. They buy as low as 15k per acre then re-sell to larger energy companies for as much as 80K+
Most times a larger oil and gas company already owns the surrounding acres to your property and wants to circle the wagons so to speak in order to protect all their nearby interests.
So I would suggest doing some research in your area and know what activity surrounds you. If you own the land also, you can make money on right of ways (ROWs) and/or selling water for fracing.
I would not take less than 50k per mineral acre.
Respectfully, Iād caution folks on the numbers that they give out as authoritative, unless they have verified those numbers. I am not personally familiar with companies paying $80k for purchasing mineral rights. As one who engages in the leasing, selling, buying, and brokering of mineral rights, I have not seen numbers like that. If I am misinterpreting what is being said, please feel free to correct me. In the event someone is paying $80k/pnma, feel free to tell me who because Iād love to visit with them! Best Regards, Mike
Yes, lots of back and forth. I have not decided at this point because I just found out from my operator that they have plans for more wells in two years which could really change the decision to hold or sell. I was also only considering the oil play and when I called the operator they said I would be getting gas and oil royalties, so donāt forget that.