Property value question Howard county


#25

One for $30,000.00, & one for $91,000.00 for all of my interest in A-269.


#26

How many acres at that price


#27

As I read the deed, I do not own any mineral rights. I purchased this property, along with other interest at an auction, 16 years ago. Until recently this property appeared to have little value. The party’s interest I purchased came from her grandfather, who bought the interest about 65 years ago. At this point, I have no idea what the owners of the right to lease, have leased for.

Thanks


#28

Unless the deed specifically states that the mineral rights were retained by the seller and not part of the deed, you may have accidentally actually bought them.


#30

Any names of buyers in the $125,000 range? I’ve got approximately 30 acres in northwest Howard county in the Callon Wildhorse area.


#31

It can be frustrating to have someone jump in a forum discussion, drop a line, and then disappear. I suspect what William is referring to is Viper Energy’s published purchase price of minerals from it’s parent company Diamondback. These are highly inflated numbers that require mathematical gymnastics. You can run the numbers pretty easily to come up with a valuation of mineral or royalty acres (they are different) and you’ll never, ever get to $125k an acre. At $25k an acre, you are at the top of the market for Permian acreage, which is what you are seeing. With oil prices in flux and pipeline capacity so limited in the Permian Basin, you’d need stellar acreage to even get that.


#32

I generally agree with “Texas_Owner” that the price to individuals is pushing $25K per net royalty acre, although the offers I receive, on an unsolicited basis, are starting at $10K, but upon conversation ultimately get closer to $25K.

Now, be very careful, the $25K that appears to me to be full pricing for individuals selling non controlling acreage, is based on 'net royalty acres."

to define net royalty acres, lets say you own 10 net mineral acres on a 100 acre tract. You own 10% of the minerals and let say the royalty is a 1/8. Upon production you won 1.25% of the production. Now if the royalty were a 1/4, you own 2.5% of the production. Clearly the payout is quite higher in the second scenario, to the tune of 2x.

At a 1/8 royalty, you have 10 Net Royalty acres. At a 1/4 royalty, you have 20 Net Royalty Acres.

So suppose you are offered $25K per net mineral acre, you would be offered $250,000

But since pricing is based on Net Royalty acre, at a 1/8 royalty the offer is again $250,000 BUT with a 1/4 royalty, and same pricing, the offer should be $500,000.

Big difference and recognize they will pay the least they can to get the acreage…


#33

Thanks for the info! I thought the $125,000 was silly and wanted to call out the one who posted it.