Values in Eddy New Mexico?

I have inherited mineral rights in eddy NM but know nothing of the actual value, I have zero knowledge in how this works. I tried to research but its all Greek to me!

This is the only information I have, Could anyone tell me what I have and how I could find out any further information? I would be so appreciative.

Township 20 South, Range 27 east, N.M.P.M. Section 12: S2 Section 14 SE/4SW4, SE/4 Eddy, County New Mexico containing 520 acres

I have no idea how to even locate on a map!

Thanks in advance

I forgot to include this is a 3% Overriding Royalty Interest!

Hi Jentara, I am no expert but have been learning quite a bit about mineral ownership over the past year. I am sure someone more knowledgeable will answer soon. But in the meantime, consider looking at the below post, which I placed recently about an overriding royalty interest I own in another part of NM. I’d also just spend some time on the forum looking at other old posts. There are lots of old posts placed by people with similar questions. You might even find a post about an ORRI in the same area of Eddy County. There is a wealth of information here. Good luck.

Thanks so much! I don’t even have a grasp of the “language” it’s very confusing. I received 2 offers approx $150,000 out of the blue to purchase our shares but don’t even know how to respond. It says approx 520 acres in the above areas but I’m not sure where it is and what it’s really worth. How do you figure NRA?

Dear Jentara,

An overriding royalty interest (ORRI) is a cost free share of production that is carved from the Working Interest under a lease. Therefore, your interest is only in force and effect as long as the lease is in effect.

There is not enough information to determine your true ownership.

For example, if the lease that created your ORRI was a 1/3 interest in 520 acres, then your ORRI would be reduced to 1% under that 520 acres. If the lease creating the ORRI was for 100% of the minerals, then your ORRI would not be reduced on that tract.

You can make a valid assumption that the party(ies) offering to buy your position knows much more about the value of the ORRI than do you. My typical advice is that if you do not need the money, you are generally better off keeping your oil interest. Have I sold minerals? Sure, to fund medical expenses. Did I want to? No. Did it cost me more money than I received? Yes.

Good luck on all of this.

Buddy Cotten

Thank you. I believe we have a 3% interest. The information comes from one of the offers sent to us. Apparently, they said they already cleared the title and are very aggressive for us to sell. (Three offers so far) Is there something going on in this area that I should be aware of?

Also, this is unusual because the money that comes in is sporadic and not large amounts so I’m sure it has nothing to do with current production.

That is a 520 acre Fed lease. NM-027642. If you have a ORRI, it’s very likely covering all 520 acres.

If it’s 3% you have 520 x 3/12.5 = 124.8 NRA.

20s27e is not the greatest place in the world to own minerals but its worth more than $150k. I’m not looking at a map but I don’t think there is anything going on there now, but development may move that way (from the SE) eventually. $1.2k/NRA is a low risk bet that it will. My guess is that is what you are looking at.

There looks to be an old gas wells there operated by Harvard Petroleum that likely pays you a little bit here and there.

I have just come across your question and took a few minutes to look up the area. It does appear there is one well producing in 20S 27E Sec 12 S/2. The well API # is 30-015-22781, name Murphy Fed No 001, check your pay statement and you should see the well number/name (most of the time) listed.

I always advise my clients to keep their minerals/ORRI’s unless 1. It is a tax burden 2. They REALLY need the money. Mineral ownership and/or over riding royalty is hard to come by. If you don’t need the money being offered, hang on the them. If you do, find someone to consult with to ensure you are getting top dollar for your interest.

Lastly, it has been my experience that offers like yours are usually 1/3 of the actual value as the buyer is looking to purchase as much interest as possible and resell it to a major operator or investor for more money.

Hope this helps.