I am trying to figure out if I should sell. I inherited 5 years ago 2 wells Hyden 45-38 and Fire Eyes I guess in northeastern Howard County. I have been offered 27,000 NRA and wondering if this is a good deal. I have around 40 acres investment; my cousin has about 95 and same offer to him. I have found out there are now 9 new wells in that section that have been fracked and pump stations running full blast for our 1 month and a half, no division orders yet and of course first flush checks, but I’m sure should be within next couple months?
$0.02
8 new wells that I saw.
8 wells @ 500kboe each if we assume they are all 2 miles long (they aren’t but that simplifies things). Over a 30 year life. 4 million barrels of oil equivalent (oil, gas, NGL, etc). In a 1280-acre unit (if we assume they are all 2 miles long).
So that’s around 400 barrels per NRA (4 million / (1280 * 8)). I don’t know if they are gonna drill any more anytime soon. Or ever. So that may be it. So… if oil averages $80/boe you are looking at 32,000 per NRA in cash flow over a long time. Plus probably another $2k/NRA from the existing wells.
Um, so, yeah I’d take $27k/NRA today for that and run screaming for the hills. But that is me. Depends on how you feel about low single digit IRRs.
If you don’t need $1m today then sure, hang on and go nuts, you’ll probably get a decent chunk of it back in the next 5 years.
For a $1m I might go solicit professional opinions from people in the directory here and not rely on loonies in the genpop (takes a bow).
1 Like
Thank you for the run down. It’s now dropped to 26,000 NRA but still on the fence. Can’t seem to jump off. Not sure what is holding me back other than it was never to be sold.
If selling, keep in mind that this may trigger capital gains taxes. You should obtain a valuation at the time of your inheritance to determine your “basis” in the property. Capital gains/losses are generally the difference between the basis and the selling price.
Also, be careful to have payment in hand before handing over any deed.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
Thank you for your time…
This topic was automatically closed after 90 days. New replies are no longer allowed.