T21S R27E Eddy County Minerals Sections 19, 20, 28, 29, 35


#1

I have recently been approached about selling my mineral interests in the above Sections in T21S R27E. We are really being pushed to hurry and make a decision. I have no idea what the value per NMA is. Any help would be greatly appreciated.


#2

Hey. I own a little bit of an ORRI in northeast of 21S 27E and that’s a good question. Here were my thoughts. Sorry this is all a bit rambling I kind of just info vomited here, character flaw. :face_vomiting:

There is not a lot of activity near your acreage. Devon has drilled some BoneSprings horizontals in my area of that township. They haven’t been great, but they are older with smaller hydraulic fractures. Devon just permitted two Lone Tree Draw wells in Sec 13/14 in Jan 2019. Maybe those get drilled and bring some more activity this way. Santos is in theory going to drill under Carlsbad at some point, that is to the West of you. But this is on the fringes of the BoneSpring productive area, when prices are low this isn’t going to get much/any focus, I’d expect.

I am assuming you are outside of the SPC/Santos leasing area, and are presumably leased to Oxy/Mewbourne or somebody else?

This is just off the cuff, but I’d say that if you are:

Unleased: Can lease for $1k/acre. 3/16 royalty common here. Can sell an NRA for $3k. So NMA is worth $1k + 1.5*3k = $5.5k

Leased: depends on your royalty. I guess assuming its 3/16, would come out to $4.5k/NMA. Maybe add in $0.5k on the chance that your lease expires and you could get another bonus. So $5k/NMA.

That is what I would expect somebody to offer you. I don’t think I’d sell for that unless you just have a financial need. Would probably sell for closer to $8-10k/NMA, but I doubt somebody would pay you that. It’s possible that I am totally out of whack w.r.t. the market here. What are people offering you?

For some general context of where this acreage is, see map at bottom. This is kind of my “go to” map for the Delaware. On the map to the left, you can see where the horizontal drilling has been going on. I would expect the “blue” area to eventually produce from the BoneSpring and/or Wolfcamp, there has been activity mostly in the good areas thus far. There is a big “hole” of undeveloped land labeled “Potash”. And a little pink area for Carlsbad. Those areas should have oil under them, they just have those issues that make their development slower. But eventually that whole blue shape should get filled in, you’d think. As you move to the North/West/East boundaries of the blue shape the wells get worse, so they may not get filled in very fast at $50 oil. But there is oil and bigger royalty checks under there.

Zoomed in map on right. You are yellow. You can see a lot of old vertical wells (just dots) and then horizontal wells. My acreage is up in the Devon blob. But I’d think that eventually the area developed by Devon and the area developed by the 3Ms in the bottom will join up. Eventually may take 30 years though so Lord knows. But that would make your acreage worth a good bit more. With time value of money and all its not crazy to cash it in now for a fair price.

I think the standard answer is that if somebody is pushing you there is a 10% chance that they have limited capital assigned to your property and thus need you to make a decision or else try something else and there is a 90% chance that they are just pressuring to take a deal that is in their favor. Shrug.

Hope that helps.


#3

NMoilboy gave you some good information. A lot of it will depend on your owned NMA in the area. If you would like specifics, feel free to message me.


#4

[quote=“NMoilboy, post:2, topic:40940”] did I understand you you correctly when you said that Santo is leasing to oxy/Melbourne? “I am assuming you are outside of the SPC/Santos leasing area, and are presumably leased to Oxy/Mewbourne or somebody else? [/quote]” This is where my lease with Santo is… So glad to see someone mention it.


#5

I think Santos is leasing for themselves. Figured this acreage was too far East of Carlsbad to be leased by Santos, thus was leased to Oxy or Mewbourne etc. Sorry for any confusion.

Basically I was too lazy to look in court records.


#6

Thank you. That is very helpful.


#7

It is leased to Oxy, Mewbourne, and Devon.


#8

I agree with your assessment of where the guy is coming from by pressuring me. I appreciate the time you took to give me your assessment, and the maps are awesome. You were correct about the leases. They are with Oxy, Mewbourne, and Devon.


#9

I wish Santo would start drilling already.:wink: where did you find those maps?


#10

Maps were from an IHS product called Petra. I have access through folks that I do some work on the side with. So, basically it’s cheatin. Good luck with Santos.


#11

Lisa,

In the past year, we helped our clients sell their interests for over $5,000/NRA in this township. If your minerals are unleased, they should demand a higher price than that.


#12

What’s happening in section 31?