Dear Mineral Rights Forum,
I own minerals right under my home in Midland, TX. My property is 0.17 acres so its not much. We’re thinking about leaving Midland but are unsure about what to do with the minerals. We got a quote for $1100 this month but I have no idea whether this is good or bad. Any insight would be helpful.
Thanks
Welcome to the forum!
First, are you certain you own 100% of the .17 mineral acres, or has there been any division over the years? (for example, it might be grandma’s ranch home that you live in and own 100% of the surface, but she might have deeded the minerals evenly between multiple children) If you’re anywhere near the city, $1100 seems low to me since that’s pretty active acreage. I would think you’d be able to get at least $3000 if not more, though it would depend on several factors unique to the unit(s) your acreage is in (development, royalty, well status, operator, etc). Buyers have come down from the $60,000/nma crazy talk (thanks, COVID), but permian is still viewed as the best place to invest.
I am also interested in finding out how to sell 4 parcels I own in Sacramento CA and their value.
As far as I know I own 100% of the minerals. When I purchased the home they were given to me because the previous owner (who leased them) could not keep them due to some conflicts with his moving company through Conoco.
All I know is that they are under lease right now. There isn’t a well drilled (or being drilled as far as I know) so we don’t receive any royalty money. We live in Fairmont Park if that helps you in terms of location in Midland.
Ah I see. You’re in the loop. The thing holding back development is just the complexity of the land position (so many mineral owners to track down, so little spots to put a surface location, etc). But it’ll happen. There are permitted wells in the west 1/2 of the section. I didn’t look up how they formed the unit to see if all of the section would be a part of those wells, but the point is there is activity very nearby. I don’t see any active rigs of the operator who filed the permit, however, so it might not be tomorrow or anything. COVID changed many a’plans.
Let me show you what’s going on if I zoom out a little. Orange rigs are wells being drilled, and every grey line/dot is a well. It’s only a matter of time before your acreage looks the same.
My main point is you have leverage to negotiate a higher price! 
Not sure 0.17 net acres should be considered as leverage.
Tracy has good info IMO. If you have 0.17 nma leased at 25% (0.34nra) you should be getting more than $1100.
As parcels get too small things stop being linear per nra because there is some fixed cost/headache associated with a transaction, but I would guess you could get double that offer.
That said, my MIL got offered a bit below $2k for the same size parcel near Wadley HEB about 2 years ago, I told her it was worth more. She countered. Hasn’t heard a word since. So, in her mind, I cost her $2k. So sometimes it may just be easier to take some money and be done with it when you are talking things of this size.
Hi Tracy,
Thanks for all the info! I should get on DrillingInfo and take a look at what’s going on around my house.
For reference, we live on the cul-de-sac on Oakmont Drive towards Wadley, right by the park. According to your maps we’re just east of those four permitted wells over the west side of Fairmont Park.
Here’s some details on the lease:
Leased for 3 years by previous owners of the house at 20% royalty.
Is there anything else I should look for on the lease?
Hah, at first I was surprised you had access to DI (to other mineral owners reading this: it’s an expensive license; there are better options for most mineral owners going it alone), then I realized you live in Midland…so…hah yeah. Probably in the industry.
BUT IF NOT, Texas RRC has a great free GIS mapping service to look around at activity. https://gis.rrc.texas.gov/GISViewer/
How close are you to the end of the 3 years (primary term)? You can get a new lease, or a payment for the delay (the formal term is escaping me right now) if it’s soon. And if it’s about to be held by production/activity from the wells being drilled, that’s great news for the price of your acreage since the biggest unknown is when someone would actually drill it.
But I do agree with NMOilBoy on the scale of this transaction affecting the decision making process vs if you had 17 NMAs. I would at the very least reach out to a couple mineral buyers and see if they can beat the offer.
Tracy,
Thanks for the response! The lease was signed on April 1st, 2019. The primary term is 3 years.
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