I know some here are still fighting to get correct statements. And honestly, I think correct may be a figment of the imagination. At least in our case, they seem to have our wells correct. Whether they have correct data for our wells might be another discussion. In any event, received our appraised value notice for 2023. Up by 36 percent over 2022. Since this is supposed to be based on revenue generation potential, and based on what gas prices (ours are nearly all NG) I would have thought valuations would have declined some or stayed the same. But guess PBTISD needs another school built and county needs some new ball parks.
Texas Tax Code Chapter 34 Appraisal Methods - Section 23.175 Oil and Gas Interests specifies how producing minerals are appraised. Appraiser must calculate average gas price each month for the well in 2022 and then average the 12 months of prices. If there were no sales in any one month, then the average county-wide price is used. Same for oil price average. In 2022, oil and prices were high and those averages are now being applied for 2023 taxes. The appraiser is prohibited from simply using a lower current 2023 price. The price is then multiplied by price adjustment factor set by US Energy Information Admin. Then the well decline and life are applied, with present value adjustment, for future production and revenues. Capital Appraisal Group (CAGI) is independent of Reeves County and does appraisals for many Texas counties. Go on CAGI site and download the workpapers for all your wells. Look at the average gas price for each month and see if any are out of line. I have a well with one month at $25 which was never the gas price. Contact CAGI about getting that month(s) changed and that will reduce the average gas price being applied. Also on the CAGI site, pull down the All Appraisal Roll which has updated appraisal values for wells as that can change almost daily. I found that some wells had already been reduced between the April 13 notice date and April 17 when I pulled down the value. Here is link to Texas statute - Texas Tax Code - TAX § 23.175 | FindLaw
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all I have to say (well not all) is wow. That is one articulate and I am assuming educated response to my post. It is appreciated. Don’t take offense to my “assuming” comment as I am in no place to assess knowledge in this world. Sometimes, after seeing these inevitable increases, I think about those low-ball offers for the leases that come in. Then I realize even with taxes (county income tax and federal income tax) I am still on the plus side.Yes, I still consider this an income tax assessed by the county of Reeves, State of Texas (which has no income tax).
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To protest valuation of appraisal, just call Capital Appraisal Group to protest I have done it before and they lowered the value of the wells. Is this the same process for Reeves County Appraisals? Deadline May 31st - correct?
Reeves county appraisals for producing minerals (wells) are done by CAGI. You can contact CAGI with specific issues, such as the gas or oil price for July 2022 has been miscalculated or your royalty decimal Is wrong or estimated production volumes in 2023 are too high because volumes fell late in 2022. Protest date is on your notice of appraised value. Mine is May 16. CAGI does not do the surface valuations.
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I don’t have the expertise/knowledge to provide a realistic rebuttal to the appraisal increase. I am shocked that Apache, the producer doesn’t protests these appraisals. In my mind basically mineral owners are the funding mechanism for PBTISD to undertake some lavish upgrades. And I know others have heard me say this, but I still don’t see the difference in these mineral taxes than income taxes. They are taxing us on the income generation value of our wells. The end result is an income tax. If they do it to minerals, then in my mind such a taxing mechanism should be applied to all commercial properties in the county - taxing the owner for the potential to make money off of rent or other means whether they do or not.
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Our increase was over a third in value for Reeves County mineral interests. And that’s a significant jump.
Using the CAGI website and logging in under my account I requested they review my evaluation again pointing out the last prices - since November - that have been the basis for my royalties. Most recent being 1.97.
Property taxes are assessed all over the U.S., based on the current sales value of the house or office building or land or minerals. Minerals are legally real estate at least in Texas. The Texas statutes specify the formula for determine value based on prior year average monthly oil and gas price, production decline and estimated economic life of the well and applying a present value discount. The county is not allowed to deviate from this law. Reeves County does benefit from increased drilling and number of wells, but so do you as a mineral owner. You are free to sell your minerals and future income stream and invest the proceeds in something else.
CAGI will use the gas and products sales reported to TX Comptroller divided by gross mcf volume for that month for price. Month by month. The gross gas sales on your check each month is total of gas, products and plant condensate and should March the CONG. This is not simply the gas price on your check. You will likely need to be specific about which month or months have a bad price. Best to create a spreadsheet to do this calculation. It will take time just as all financial work to reconcile bank accounts and make decisions RE stock or other investments. If other royalty owners in your well get a change, it will be applied to all royalty owners. The oil company may protest and if so, then you will benefit from any changes.
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