Value of Reeves County Mineral Rights

My grandfathers mineral right which are leased seem to have acquired a permit finally.

He just received a offer in the mail for 20k an acre for 160 total acres to sale.

That seem high to anyone else with recent experience in the are?

Location is NW/4 of Section 177, Block 1

Also how can I see where this section is on the RRC Viewer? I only see A-954 highlighted.

Lastly, how can you find production numbers of wells in the area? I would like to do the math to get ball park figures of the return on a well in that area.

Thanks for your time.

Kyle: That is a great area and Concho is a great operator to have drilling on your minerals. $20k/acre is equivalent to roughly 1 million barrels of oil production at today's oil prices if your grandfather's minerals are leased at 25%. The one permitted well probably won't get you there or at least for a very long time. However, there will be more wells sometime in the future and could very well be 20 or more in the future. Only Concho knows when those additional wells will be drilled and they are likely only "scheduling" wells for the next year or so. That 160 acres holds a lot of value.

Concerning the RRC viewer, A-954 is the abstract number of that section so if you zoom straight to that you should then be able to zoom out for a broader view of the area. If you go to the menu bar at the top of the map and click the "i" button you should then be able to select Identify: Wells there. That allows you to click the green dot at the end of each well to pull up an information box that includes a link to reported production near the bottom. Be aware that the production on oil wells is almost always for the entire production unit combined and not each individual well.

So here is my gramps contract I pulled off the internet. Looks like he took one for the team getting 20% instead of 25%. Looking at the date and 3 year "primary term" am I correct in saying that if there isn't a well by this coming October 15 this lease will be finished and we would be able to get a better deal? as well as money up front for the lease per acre?

The addendum provides for an optional 2 year extension at $300 per acre. COG must either commence operations or exercise its option by October 15 to keep the lease in effect.

So if they do, we’ll be stuck @ 20% forever?

Yes. 20% isn't the worst royalty to have. 25% would be better, of course, but 20% can still make your grandfather and his heirs a good amount of money on 160 acres. Drilling commenced on 2/27/17 so it looks like you will be getting royalties in the relatively near future.

Where did you see that drilling started?

I have a subscription service that tracks that.

Could you provide a screenshot by chance to show my grandfather. He is quite in the dark about the whole thing. How long does drilling usually take?

I'll send you a screenshot soon. Drilling should be finished by now although I won't know about the well being completed (frac'd) until a completion report is filed with the Texas Railroad Commission.

Awesome, really appreciate it.

I have a follow up question. What does the "NW/4" mean from the survey? Layman like me want to assume northwest quarter of the highlighted area on the viewer so he'd only be entitled to 20-25% of the line.