I am trying to figure out if I should sell I inherited 5 years ago 2 wells Hyden 45-38 and Fire Eyes I quess in north eastern Howard county I have been offered 27,000 NRA and wondering if this is a good deal I have around 40 acres investment my cousin has bout 95 and same offer to him…I have found out there are now 9 new wells in that section that have been fracked and pump stations running full blast for out 1 mouth in a half no division orders yet and of course first flush checks…but I’m sure should be within next couple months?
$0.02
8 new wells that I saw.
8 wells @ 500kboe each if we assume they are all 2 miles long (they aren’t but that simplifies things). Over a 30 year life. 4million barrels of oil equivalent (oil, gas, ngl, etc). In a 1280 acre unit (if we assume they are all 2 miles long).
So that’s around 400 barrels per NRA (4million/(1280 *8). I don’t know if they are gonna drill any more anytime soon. Or ever. So that may be it. So…if oil averages $80/boe you are looking at 32,000 per NRA in cash flow over a long time. Plus probably another $2k/NRA from the existing wells.
Um, so, yeah I’d take $27k/NRA today for that and run screaming for the hills. But that is me. Depends on how you feel about low single digit IRRs.
If you don’t need $1m today then sure, hang on and go nuts, you’ll probably get a decent chunk of it back in the next 5 years.
For a $1m I might go solicit professional opinions from people in the directory here and not rely on loonies in the genpop (takes a bow)
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thank you for the run down …it’s now dropped to 26000.nra butstillon the fence can’t seem to jump off …not sure what is holding me back other than it was ne er to be sold…
If selling, keep in mind that this may trigger capital gains taxes. You should obtain a valuation at the time of your inheritance to determine your “basis” in the property. Capital gains/losses are generally the difference between the basis and the selling price.
Also, be careful to have payment in hand before handing over any deed.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
thank you for your time…
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