Reeves County Offer

We just record an offer from RRIG Resources of $4500 nma for our Reeves County property. This was a purchase of rights, not a lease (we are presently in year 3 of a lease to OXY). A month ago we record an offer of $2000 nma from another outfit.

Anyone know what's going on there to see such a jump?

Thanks/John O'Neil

Just going off the fact you're leased to Oxy I'd say those offers are incredibly low. Oxy has a great position in the southern part of Reeves and is making some very good wells.

We are in Section 6, Block 60

I found your lease to Oxy in online deed records and it looks like you are in Block 50 Township 7. Very good area. Oxy just completed a well in the section touching the southeast corner of yours that tested at 1,200 bopd. There are great wells all around that area.

how did you find the lease? Point me.

Thanks

Marcus T said:

I found your lease to Oxy in online deed records and it looks like you are in Block 50 Township 7. Very good area. Oxy just completed a well in the section touching the southeast corner of yours that tested at 1,200 bopd. There are great wells all around that area.

Texasfile.com is what I used.

$4500 is low unless you have unusual circumstances with your minerals, such as title issues, restrictions, etc. the $2000 bonus is likely a fraction of the royalty payments you would receive from a decent well.

Morning Wade

The potential buyer upped his offer to $8500/nma. I've got a couple itchy cash needing partners, yet I don'y think we should sell.

Damn!!

John

John,

You're right - that's still too low for that area especially if your minerals are leased at 25% royalty to Oxy. Enormous future potential there.

Can someone tell me where block 60 is and a block to one side of it? Thanks.

Hi Linton - It's really Block 50 Township 7 we're talking about here. I don't think there is a Block 60 in Reeves County.

Thank you so much, Marcus T, thought I was losing my mind because I searched and searched for it and could not find it! Appreciate it. Linton

Regarding Reeves County and offers... we have received various offers about the same... $4,000 for a purchase of rights and $2,000 for a lease. Is this average market for Permian Basin or are these considered somewhat low-ball offers...? Thnx

Read Wade Caldwell’s post 6 up from yours… Linton

There is no doubt that everything everywhere is depressed right now in the "oil patch", plus I don't live or have any interest in this area, so I don't have any dog in this hunt; but, the two numbers don't seem to match under any circumstances. If someone is willing to pay $2,000 for a lease, then IMHO, the mineral rights purchase is way off base. My old farm boy rule of thumb would be no less than a ratio of 5:1.

Good Luck!

purchase or lease...... his $4,500 referred to PURCHASE?

I wrote a lengthy post on the issue of selling minerals in the main Reeves County thread a couple of weeks ago. Few offers will get close to what a discounted cash flow analysis would show you minerals are worth assuming you will eventually have wells on the property. If you have no wells, start at $25,000 per NMA. You won’t get that from most mineral buyers but they may actually be worth more.

Wade:

Thanks for all your expert help. Great information.