I OWN A FEDERAL LEASE IN EDDY COUNTY, NEW MEXICO T23S-R28E WITH AN ORRI.
IN THE EARLY 1970’S CHEVRON DRILLED AND PRODUCED ON 27 VERTICAL WELLS. AROUND 9 ARE STILL PRODUCING, BUT THEIR ECONOMIC LIFE IS IN QUESTION. BASICALLY, I WOULD LIKE TO KNOW IF ANYONE KNOWS WHETHER OR NOT THE SAME LAND CAN BE DRILLED ON WITH NEW HORIZONTAL WELLS AND IF SO HOW MANY AND WHAT MIGHT BE EXPECTED AS A VALUATION AS I AM RECEIVING LOTS OF UNSOLICITED OFFERS FOR $15,000 NRA. MY RESEARCH INDICATES THAT AN ACRE SALE IN EDDY COUNTY CAN GO ANYWHERE BETWEEN $30,000 AND $95,000.
A sale of leases in Eddy County has gone for as high as $95k. That is somebody getting a 10 year BLM lease to develop oil and gas. Paying 100% of the costs and getting (in this case because it was Federal) 87.5% of the revenue. People also sign leases in Eddy County for below $1k/acre. So yes, a lease bonus might be between zero and a whole lot.
Each of your “acres” (i.e. NRA) is paying 0% of the cost and getting the other 12.5% of the revenue. Not that it makes your other questions moot, but should get that out of the way first. Lease offers and NRA offers are not the same thing. You are not going to get $30k/NRA, much less $95k/NRA.
Can it be drilled with horizontal wells? Yes. If so, how many? Tough one, as its a matter of when. You might get 12-20 wells per mile wide piece of land. Might. But at the rate that rigs are drilling, that might not all happen for 30+ years. This is why things like permits or other indications of upcoming drilling will affect your offers/value. What might you expect as a valuation? Personally, I don’t think $15k/NRA is too bad. But I am poor. If you were covered with permits it would be more, but I doubt it would be over $20k/NRA.
If people are firing off $7M offers to you, you are in a pretty good position. But that is what a 5% ORRI in 1100 acres will get you.
You should be getting paid for the WPX Longview horizontal wells in Sec 1/12. See map, you are purple cartoony blobs. If you are not, contact WPX and see how much revenue you have in suspense. They aren’t great wells, but 5% of “not great” is a lot of $.
I think the offer is in line with what I have seen in Eddy County, for the most part. I would also add that your net royalty acre calculations are off quite a bit so you might keep that in mind when evaluating an offer. For example, there are 800 gross acres in the first tract and you would multiply that by your ORRI % to arrive at NRA.
We have been offered 10K NRA for multiple sections in t23s, r31e. Declined. Also 30k pnma for a mineral interest in Lea County. Declined as well. Devon and Marathon are in the process of drilling (they have been spud) 4 wells with multiple permits still to go.
