Flooded with offers: Block 13 Section 301

Texas Mineral Rights Reeves County, TX
1

Greetings All,

We own acreage in Block 13 Section 301 (Leased to Diamondback). We also own interest in Block 1 Section 189 (leased to Concho). Traditionally, the offers for B13-S301 have been less frequent and inferior to those for B1-S189. Recently, that has changed. Since December, we’ve been getting offers to purchase Section 301 for up to $34,000pnma. This is higher than any that we’ve received for B1S189 which has two units permitted, one of which already has surface casing completed. There are no permits on B13-S301 that we know of. The lease was extended until February 2021. Does anybody know if something is planned in the area?

Also, how do you guys treat the companies that send you really low offers? I understand the strategy but it really gets under my skin. We keep a list of “good” and “bad” companies. If production on 189 underwhelms, we may sell B13S301 in the next couple of years because we want to buy a house in a better school district (Los Angeles) but we won’t sell to any of the companies that are offering less than a lease bonus.

2

There are 5 rigs running within ~1-2 miles of that section. Lots of Activity and new pads/roads just northwest of you, but I don’t see any new earth moving in your section just yet.

3

Thanks. That is what we’ve seen too. We certainly appreciate the influx of higher offers but we are just trying to figure why they are suddenly coming considering oil prices are down. When this happened with our other section, we soon learned of the Left Hand Bull Unit and the same pattern repeated with the Sandstorm Unit. However, the offers preceded the permit showing up RRC website. I sometimes wonder if some of the lower offers don’t come from straw-men companies acting as agents or intermediaries for the operators so they can try to hang on to the royalty money.