How would I obtain the appraisal for my property in Reeves county,texas?
Moved this over to Reeves County , TX for you.
Randal,
I sent you a request for the legal description on your lands in Reeves County in our private conversation but never heard back from you. Where your acreage is within the Section will determine what Unit and Well(s) you are in.
There won’t be an “Appraisal” for your interests, at least not through the County Appraisal District, until oil and gas production has been established and sales have begun. Even then, the Appraisal Roll will probably take another 18 months to become available for public viewing.
If you want to pay an Engineer to prepare some sort of report on the value or potential value of your interests, you could contact one, but that will be quite expensive.
Hope this helps -
Charles Tooke
Do mineral owners usually appeal the first assessed appraisal of RCAD? How do we know if it is excessive or reasonable?
Generally, the county sets the tax rate, but the well value is determined by an independent third party company, such as Pritchard & Abbott. Not sure what company values wells in Reeves County. Valuation is based on production volumes, decline rates and current oil and gas price (generally on Jan 1 each year). Property taxes on wells are not insignificant.
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These are wells placed on rolls for the first time, and I think the value is excessive compared to actual production. The appraising firm is CAGI from Austin. Just checking to see if others have done any research on this.
I am also concerned. We have a Well on Blk C-10, Tract 16, SEC 16PSL. In early 2018 the Well was valued at $500,000 and then boom in September they changed the value to $1,000,000. I have attempted to find out how they calculated the value but no answer yet.
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You need to correspond with Trent Johnson at Capital Appraisal Group. He answered my questions; I’m just not sure I understand his answers. I have a real problem when the value is more than the income, and the value is, also, calculated on a “what agreed amount a willing buyer would pay to a willing seller”. We are not a “willing seller”.
Always appeal the appraisal when it goes up. They will go back out and review it. I protested my appraised value last year, and ir got lowered. They double checked the production of my Big Fundamental and Little Fundamental wells. The value was based on the production. Hope that helps. Also the appraiser was from Austin.
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The value is just a mass appraisal that is not tied to a willing seller and buyer offer. They are just a percentage of increased value across the board. You have to protest to get any real appraisal for your specific property. Give input to the appraiser of what your income is if he/she still appraises it too high
I was just quoting from the CAGI appraiser as one of the criteria that establishes value as of January 1. Our production is new and not too far from yours, but his estimate of production is higher than what it actually was for 2018, and the proceeds, also, lower
I will be protesting. Let all know how it goes.
Helen, The value of a well is more than your income. It is the present discounted value of the estimated future income. That is an engineering estimate, based on production volumes, anticipated decline in production over the years, current oil price with some factor for increase over time. A royalty interest / minerals is real estate and taxed at the market value of your share of the well - not the net income you received that year. In that sense it is not different from the market value of your home. For example, if you home is worth $240,000, you could not rent it for $20,000 per month (20,000 X 12 = 240,000). If you received $3,000 in royalties last year, you would not sell for $3,000 as you know that you cannot match that income in interest or dividends from another investment. You would awant a lot more money. That is what the appraiser meant by willing buyer and willing seller.
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Discounted present value is still a wild guess. I appraised real property for a number of years and I could prove to you on paper that your home was worth $100,000 however I could also prove to you that your home was worth $175,000. I am concerned that taxes are on the very high side of value if by instructions or by job reflection to obtain the very highest value. As of now, my interest in the well is being taxed in excess of 8% of the income and each month the production slides and the tax percentage increases. I don’t fault Reeves County in fact I hope they put all this money to excellent use. I just want a fair valuation for both sides.
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Tennis Daze is correct. The “value” of a well is the total discounted value off of an oil and gas production stream, which is not an appraisal question but an engineering question based on decline curve analysis. If the amount is significant enough, you may want to hire a consulting engineer or geologist to run out the decline of your well(s) or comparable offset wells, as well as do a discounted cash flow analysis. Before you say that you can’t do a cash flow analysis because no one knows what the future price of oil and gas will be, you actually do. It’s called the NYMEX strip. It’s the industry standard and would be acceptable to the appraisal district. If you don’t’ know how to do this and need help, contact either the local SIPES - Midland chapter (my preference) or the Permian Basin Section of the SPE.
You don’t have to hire anyone as a consultant. Value is too complicated for the layman. My point to all mineral right owners is to protest their appraisal if it goes up significantly. The appraiser will take another look at the value and you’ll probably get its value decreased.
If the well came on line the last three months of the year, those are usually the easiest to protest because the value is skewed by the big early production, especially if the well went through a rapid decline.
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How does Reeves differentiate between surface rights owners and mineral rights owners? If you own an entire section 100% and have sold 100% of the mineral rights then I would assume all mineral rights owners would be paying based on the actuals coming from production. Surface owner would pay based on value of the land minus mineral rights?
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Reeves County taxes surface separately from minerals, even if you own both. Surface is taxed every year. Minerals are only taxed when producing. If there are no wells, then there will be no mineral taxes due.
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We received income from royalties in Reeves county in 2018. Haven’t received a tax bill from Reeves county. Curious to know when the bills are sent. Who do we contact at the county to find out if taxes are due?
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