My mom inherited mineral/oil/gas rights to a little over 2 acres in Reeves County. Out of the blue, she recently received letters offering her 10K, and then 25k, to buy those rights.
The property is in Section 2, Block 56
Is 25k a good offer? Should she hold out for more? Is there a lot of activity in this area right now? This is all brand new to me so we could use help from people who know what they are talking about…
Thanks for the help!
As a fellow owner I can tell you that it’s probably an average offer. I have received offers in the 30s, however it is dependent on a number of factors that the experts on this forum can tell you about. In my case an operator has the lease and has permitted / drilled two wells and they are almost ready to start production.
Good luck!
Has someone approached you to buy or lease? It seems lately people are using the terms interchangeably. My cousin (an older woman with no knowledge of the industry) recently received an offer from a company and the landman used the word ‘buy’ when, in reality, he was seeking a lease. The price to actually buy (transfer title to that person) should typically be higher than to lease (meaning someone wants you to agree to an amount with a term and a certain royalty you will be paid upon producing property - this doesn’t change ownership). If anyone responding can explain why people keep using ‘buy’ when they mean ‘lease’ I’d love to know why. 
This is very helpful, thanks Jesse! Out of curiosity - did you negotiate with the offerors at all? It sounds like you didn’t end up selling
Its a good question Cami - these are offers to buy my mom out of any rights to the land…though at some point last year, she also received an offer to lease. She wasn’t interested in the lease though…
As for why people make the mistake - I’m not sure!
In this case it sounds like they are offering to buy your unleased minerals at $25k/acre. You are in effect selling your lease bonus plus your net royalty acres, of which you should get 2 per acre assuming a 25% royalty lease. To figure out the value, figure out the value of the components. Make sense?
What can you lease an acre for in Northern Block 56, Reeves Cty (and get 25% royalty). What can you sell a net royalty acre for in that area? I would think you are more likely to find people with specific numbers to those separate questions.
I would guess that adds up to around $30k/acre. But like I said, guess. Nobody likes to feel like they didn’t get the best deal possible, but at some point you may just be better off getting $50k out of the blue then spend too much time trying to find a better offer that may not come.
There are no permits in Sec 2 right now. Resolute is running a rig in the unit north of you.
Unless your mother needs the money now, she should’nt sell. If she leases the land she’d get a check for $20,000 (more or less) and a monthly royalty check. Granted this all assumes that the company drills and puts her acreage in the unit. Your mother isn’t going to get rich from either options, however I would much rather have a monthly check each month, than a lump sum payment.
Thanks Z, this is really helpful as well. My aunt, who inherited something similar, signed a lease but didn’t get any signing bonus…only the promise of a royalty check if and when they drill. Does that sound normal in your experience?
This is great, N, thanks for your guidance. All of these questions are useful as I do more research - and seem quantifiable so that I can compare this option to sell with possible offers to lease. I appreciate it!
Modi,
Your aunt’s lease may have provided for a larger royalty if she chose to not receive a bonus. I see this every now and again, the leasing company will sometimes provide 2 or 3 different options for a landowner to chose from.
Clint, this is fascinating, insofar as I understand what I am looking at. Is it your sense, based on the nearby activity, that drilling will likely occur in the near future on this plot? Or in your experience, is it incorrect to make that assumption?
James- 4 years ago my siblings and I received a letter offering us $2500 for our deceased Dad’s mineral rights that we didn’t know he owned in Reeves County. The recommendations I rec’d from a number of people on the Mineral Rights website was all “don’t sell”. We didn’t.
Today we know that Patriot Resources has drilled on the lot. Awaiting info on what this will mean financially. If you can wait, do. Best Regards, Barry
Mod,
Blk 56 Sec 2 is surrounded by a number of prolific wells just offsetting it and away it’s from any major geologic concerns. Assuming the land/legal situation is not overly complicated and a deterant I think it would be a reasonable expectation that this section will be drilled in the not to distant future. That said, these things are very hard to predict, for instance if its a stranded section far away from the given operators core operations it could take longer despite being great rock.
As a land/mineral owner in that area, know that you will be getting low ball offers from mineral brokers. They buy as low at 15k per acre then re-sell to larger energy companies for as much as 80K + Most times a larger oil and gas company already own the surrounding acres to your property and want to circle the wagons so to speak in order to protect all their nearby interests. So I would suggest to do some research in your area and know what activity surrounds you. If you own the land also you can make money on right of ways Row’s and/ or selling water for fracing. I would not take less than 50k per mineral acre.
Respectfully, I’d caution folks on the numbers that they give out as authoritative, unless they have verified those numbers. I am not personally familiar with companies paying $80k for purchasing mineral rights. As one who engages in the leasing, selling, buying, and brokering of mineral rights, I have not seen numbers like that. If I am misinterpreting what is being said, please feel free to correct me. In the event someone is paying $80k/pnma, feel free to tell me who because I’d love to visit with them! Best Regards, Mike
Yes, lots of back and forth. I have not decided at this point because I just found out from my operator that they have plans for more wells in two years which could really change the decision to hold or sell. I was also only considering the oil play and when I called the operator they said I would be getting gas and oil royalties so don’t forget that.