I recently inherited some non producing mineral rights in Lavaca County, TX that are in the Edwin Richeson Survey, A 40. 68.4 acres.
I have started receiving offers to purchase the mineral rights. I have no idea how to ascertain the value of the minerals. I have read on this site that, generally, folks recommend never selling mineral rights unless you really have to. The offers I’m receiving seem fair… but I really don’t know how to measure the value of future production (if any). I looked at the GIS map and there appears to be many dry wells in the area.
I am retired and could use the money. That said, I can wait a while longer if maybe these minerals will start producing and provide me with some additional income. The minerals are currently under lease from EOG. I know the lease bonus was $1,200/acre. Lease is good for another two years.
Anyone have any inkling as to what these rights are worth??
I don’t know your offer, but i would NOT sell. EOG has plans to drill that area. If there is an option period…which I think they had on all their leases in that area you would be getting another $1200/acre in 2 years which is $82,000. An example of royalty on your 68 acres…say in a 1200 acre unit/pool that 1 well averages 300 barrels per day first year at $70 / barrel and 22% royalty you would get $95,000 the first year alone…this size of unit could have up to 6 wells…so $565,000 just the first year on these wells alone…this is assuming you have 100% of the mineral rights for the 68 acres. If you need the money desperately…then I always figure $5000/acre minimum which would be $340,000…but I would hold these. Matrix is drilling 4 new units bordering you place on the west as we speak…and EOG has committed 5 billion to this area alone…they are starting on the south play by US90A hallettsville-Shiner road, and another 1288 acre unit on the north end of their play close to moravia/Breslau that will go up in October. This well is a test for the upper Eagleford, lower eagleford and Austin Chalk…they are doing 3 wells on this unit back to back… Looks like they have about 25-30 units 35,000 acres to drill out,.,and will be using 2-5 rigs coming in shortly…Also looks like just lower Eagleford wells on the southern end of the play…
I totally agree with MR_ML. Unless you desperately need the money for shoes for the baby with winter coming on, just look at his math. There’s no reason at all to sell mineral rights outright. In addition, personally speaking a new lease comes along every 10-15 years with money/manna from heaven. So if nothing ever happens you or your heirs will get some walking around money if nothing else.