I recently inherited a small acreage position in Martin County. The acreage is located in the W/2 of Section 3, Block 37, T1S, Martin County, Texas. I started receiving offer letters from mineral buyers. I have received offers all over the spectrum. I was hoping any of the experts on this site had any knowledge they would care to share on what is a fair offer.
Hi. We also have received numerous offers to sell for an interest in Martin County. We have 10 acres and have received offers above 150K. We are not going to sell however as the interest brings in 350 per month on average for two wells. More drilling is possible and probable. If you don’t have to sell, don’t. Good luck.
Rick wow that’s a really really high offer. Care to share which company made that offer? If It was a legitimate offer I would pull the trigger at that price for my minerals.
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Hi Virginia - minerals are hard to get back once you sell them. Remember, if they are willing to buy them, they’ll make a lot more over the long haul than what they are offering you. Also, the Railroad Commission can be as much as 6 months behind on new drills. There might already be a horizontal going across your place and you don’t even know it. Before you sell, spend a little money on an appraisal and find out what they are really worth.
Virginia, I would also keep in mind that not all areas in Martin County are valued equally.
Isn’t everyone an expert?
So it’s Pioneer operated. No HZ development or permits. Probability of HZ development in next 20 years = Good. Probability of HZ development in next 5 years = Not that good.
Side note:
If people are willing to buy them, they are BETTING that what they buy (on aggregate) will make a lot more over the long haul than what they are offering you. It’s a bet. There is risk. They de-risk it by buying multiple tracks in multiple units. Spread out your bets. Because it’s kind of binary. You get a bunch of wells and its worth 4 times what you paid for it. You get zero wells and its worth, well, zero (or the value of the verticals). Despite the boom the industry has gone through from 2014-2019 there are far more units with zero wells than with a bunch. Anybody can point at a lease with a ton of wells on it and say “see, Dad was right, don’t sell your minerals”. Nobody talks about the far more folks who sold for $15k/NRA and are on the beach somewhere and there are still zero wells on their land. In the end, yes, I think the math works out in favor of the buyers, but its a few home runs and lots of strikeouts near-term. Sorry, end of speech.
Your acreage marked on map below. There are 3 Pioneer permits (approved July 20) in the E/2 of Sec 3/10. Which may mean Pioneer is going to drill there. Which may be why you are getting more offers. Or maybe everyone always just gets offers. As I said above, if your tract eventually ends up looking like one of the ones covered in yellow lines its worth a decent amount. Right now Pioneer has 250 approved permits and is running 7 rigs, so they have about 3 years worth of drilling permitted. So you’d think it will take a while before they get anywhere that is not currently permitted.
On a risked basis, I’d say a fair price in the current environment is about $8k per net royalty acre. So if you are leased at 25% royalty, that is $16k per net mineral acre. Your mileage may vary.
Good luck.
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I don’t claim to be any sort of expert. I just hate to see owners get rid of their minerals without first investigating the value. Thank you for your insight here. You explained the issue very well and were helpful to all of us.
For those of you with Mineral Rights in Martin County, the Houston Geological Society is having a general dinner meeting on Sept 21 with a topic that I found interesting. “The Martin County Texas Super Stack: Developing the Sweetest Spot in the Midland Basin”. The speaker is Derek Buster with Guidon Energy. You can look up more information on the Houston Geological Society website. Might be why many of you are getting offers to sell…
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