My family inherited 5 acres in Reeves County, located in Section 271 Block 13. It’s divided among 8 of us so my share is a very tiny 0.625. I’ve receive a couple of phone calls - different reps - offering to buy my rights. This last offer was $100,000. I’m not interested in selling but am curious as to what kind of offer that is - legit or not? Really sounds too good to be true.
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Was $100K based on 5 net mineral acres or just your 0.625 net mineral acres? If it was made on the 5 NMA, then it’s likely a fair offer that mimics current market pricing. However, if it’s $100K for 0.625 NMA, then take it and run! In all seriousness, a reputable buyer would tell you how many acres the offer is being made on. When a buyer only gives a lump-sum number without acreage details, it can be a sign to tread cautiously.
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Thank you for this information. It’s really helpful. They gave me the impression that the $100K was for my .625 net mineral acres, but I’m really skeptical because you’re right - they gave me the lump-sum number without specifying the acreage details. I didn’t know enough to ask, but since I’m not interested in selling anyway, it wasn’t that important. Yes, I will definitely tread cautiously. Thanks for the heads-up!
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It depends entirely on the specific location. We receive offers in the $20,000 to $30,000 per nma in Block 4 almost every other week. These are flippers who offer about half of the value who are trying to double their money.
In Block 2, we have received offers of $50,000 per nma which is also about half the value based on the net present value of future cash flows using a 10 percent per annum discount rate (NPV10) of full development.
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Thanks! You pretty much affirmed my first reaction - don’t sell. Not because I want to hold out for more money, but because it was a nightmare proving ownership of the property. Any existing records were from the 19th century. This was only 2 years ago, so I really don’t want to go through all that again. Again, your reply is greatly appreciated.
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Hi, Do you have any recent data on Block Section 9 offers? Cimarex is our operator there and we are receiving offers for purchase. They acquired Section 8 and have plans for wells across both sections. Thanks, Jesse
M_A, so you’re saying they discount cash flows 10% AND THEN reduce the NPV value by 1/2? Wow, that’s some double-dipping if I’ve ever seen it!
Laugh. Future cash flows at full development discounted back at 10% is a ridiculously aggressive evaluation. Assuming full development has not already occurred.
The oil business is risky as hell. People should pay you a bit over 10% discount rate for wells that are online and someone can reasonably forecast their future cash flows. For wells that haven’t happened and may never never happen, and you don’t know when they might happen, and you have zero control over them happening, your fair discount rate is a lot closer to 25%.
$50k an NMA for Reeves is pretty serious.
Got it. Thanks for your reply and definitely worth paying attention to. I appreciate the feedback.
This is an interesting area-- I also have a portion of a 5 acre plot Section 271 Block 13. From what I gather, the Toyah Valley Alfalfa and Grape company subdivided this area into small plots and sold to people saying it was good farmland. My family had 3 lots. It was actually probably a scam.
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Yes. This was an area involved in a great land swindle, scandal involving a Methodist University and the desire of the Methodist Church to have flourishing Methodist communities. The soil is fertile if watered. Some lots were purchased by Methodists who were swindled, other lots were purchased by Methodists in an attempt to buffer the loss to the University. This happened at the beginning of the 2Oth Century, early 1900s A co worker of mine from some twenty years ago perked up and expounded upon the history of the Toyah Valley Grape And Alfalfa Co. I wish I had taken notes. He would have given me the book about the swindle but he had just sold it in the process of reducing his mother’s estate. I have not been abe to locate any books or particular history about it. So somewhere in that land purchase there will be a Methodist connection. Others o n this site have posted much more about it, Hmm, haven’t googled it in a while…
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Extremely interesting. If I ever come across additional information, will let you know. Somehow, the Methodists are ringing a few rusty ancestral bells in my brain. More pieces of the great Toyah Valley Grape and Alfalfa Co. puzzle lay scattered. To be gathered later…
Thank you for this.
Thank you for this. It would explain how the property came to belong to my great grandparents. They probably thought it would be a good deal for them and explains how come the property - all acreage involved - lay a veritable wasteland for at least 120 + years.