My friend's grandparents own some mineral rights in West Texas, and they are thinking about selling them. They've received some unsolicited offers that appear to be quite, if not outrageously high, and I'm trying to understand why that would be.
For example, on one of their properties, they've averaged about $450 / mo in net income (over 4 recent months), and the offer on that specific property is around $250,000. From a little bit of research, I was under the impression that you could expect somewhere in the range of 5 years of income for a purchase price, but this is more in the 40/50 year range.
Some details -- their ownership stakes are small, most of the properties, they own less than 1%. Also, they are perpetual rights, which I guess are more uncommon these days?
Elliott,
The existing production could just be the tip of the iceberg. For instance, they may be getting paid on older vertical wells in an area with great horizontal well potential in one or more productive zones. A legal description would allow me or others on the forum to give you an idea of what's going on in their area or on their tract. From the offer I would guess that there are multiple horizontal wells permitted on their section/tract.
Elliott, I'd be happy to look at the properties on DrillingInfo to see if there are permits, and if so whether the wells have been spud. Based on your post, it sounds like they own a variety of interests in multiple properties.
Unsolicited purchase offers usually represent a small fraction of what the minerals are actually worth. As a hobby, we broadcast property descriptions of interests that are or may be for sale to a large network of mineral buyers to get a feel for what a property is worth. I'd be happy to do that for these interests and get back to you with what the various mineral buyers come back with. My email is [email protected] Feel free to send over any legal descriptions and I can post the drillinginfo results and send out the mass email to mineral buyers.