Offer to purchase surface interest only


#1

My wife owns 365 acres in the East half of Section 14 Block C-18. She recently received a generous offer to purchase “surface interest only”. Has anyone else received such an offer or know what is going on?


#2

We are also in that area kind of curious. Got an email from a company offering to buy I thought it was low. They replied that there is a fault running through the property and that’s why it’s not being developed. We are abstract 1473.


#3

We are 1473 also. Was your offer to buy mineral rights or surface? I’m not a geologist but I would think a fault line runs more than through just a section.


#4

Mineral rights. We are currently leased with Luxe until 2020. We only have 26 acres.


#5

There is a producing well in the west part of your section. Click on this link to open the Texas RRC’s map viewer on the well: http://wwwgisp.rrc.texas.gov/GISViewer2/index.html?api=38935611 Be sure to hire an attorney to help you with your transaction. It would be a shame to unintentionally convey your minerals along with the surface acreage.


#6

Totally agree. I’m just trying to understand why they want “surface interst only”. Would never proceed without Wade Caldwell’s review and endorsement.


#7

Are you guys leased with Luxe or anyone else. Just trying to see if we are pooled together?


#8

Luxe. We’re leased through January 2020.


#9

Is there a way to talk without putting the whole thing out there I’m not that well versed in the new format. I believe we corresponded a year ago.


#10

There used to be a PM but I don’t know if it exists on the new format.


#11

Anyone know the difference in tax rates between sale and royalty payments ? Thanks


#12

Hi Mike,

I’m not a CPA but I do have a good idea of what you are taxed at. I suggest that you contact your CPA for more concrete answers.

If you are selling your minerals You will pay longterm capital gains tax which is anywhere from 15% to 20% depending on profit made from the sale. Long-Term Capital Gains Tax Rates in 2019

Production tax in Texas is 7.5 % for Natural Gas and 4.6% for gas condensate and oil, the operator will deduct this from your royalty checks. The Fed treats royalties as income which will be taxed at your income tax bracket. https://comptroller.texas.gov/taxes/natural-gas/


#13

See this post and thread Tax hit on mineral rights sales


#14

Hi Moorehead and Mike,

I own minerals in Section 10, 11, 12 Block C-18 in Reeves.

There are several permits in the area from different operators to drill. Section 10 has a producing unit and Section 11 & 12 have permits. The area has been heating up quite a bit over the last 6 months and expect it will only see more activity.

Section 14 looks to be right above section 22 where there are several permits.

Based on the company wanting to purchase surface rights, I would guess they are looking to use the land in someway for the development of wells. Might be storage, infrastructure, who knows. This could also be a third party who knows they can flip those surface rights to an operator and make the money back.

My suggestion would be to hang-on to those surface rights and wait for a company to approach you to lease them. (You can also do homework and reach out to the operators to offer a lease.) In that scenario you’ll receive a leasing bonus, royalties (I believe) and also not be selling any future rights to the property.


#15

A lot of players are piling into the lucrative water game right now. (disposal/recycling/sourcing) They are likely chasing down the surface rights for Salt water disposal wells, frac ponds & water wells, or water treatment/recycling plants.


#16

To all in this string, I am in C-18, section 4 south of most of you. Luxe has leased my 80 ac. mineral rights and MDC Energy LLC, and WaterBridge has leased easements for pipelines. So, the area is getting crazy busy. All the best, Navgoat


#17

Thanks everyone for the info it helps a lot. Especially when people are calling and emailing to tell you your interests are in a bad area you better sell quick for a low price.


#18

You can make a lot of money with your surface rights. The company may want to put water wells In for fracking. .35 cents to .70 cents a barrel. Row’s " right of ways" for pipelines or transfer ststions could also make lots of money for you. If you have the mineral rights and surface rights, then your’e in the driver’s seat. Don’t sell just lease everything. Hire an attorney though, to review all leases.


#19

What value would you put on leasing surface rights versus mineral leases? Are surface rights valuable and are bonus payments made just like mineral rights? I received my first surface rights offer.


#22

There is a large water component to oil and gas development. Where y’all are, for every barrel of oil that is produced, 7 barrels of water are produced. This needs to be disposed of therefore companies acquire surface rights for water disposal. Moreover, fracing wells also has a large water component which the surface owner, assuming the rights are still in tact, can develop and sell water for oil and gas operations. Water midstream projects can be very lucrative but they also require hands on attention and operating acumen.