My sister passed away and had some royalties in Andrews county. They are currently producing through CWI. We are trying to decide what to do with them. We would like to know the true value. How do you determine value? I have been offered in martin county anywhere from $5000-10,000 net mineral acre. Any advice/formula would be helpful.
Carolyn, I am sorry for your loss.
As a starting point, the Andrews County Consolidated Appraisal District https://propaccess.trueautomation.com/clientdb/?cid=53
provides an "Appraised Value" each year. I would use that as a valuation floor. Next you can look at the average net monthly royalty check. As a buyer of royalties, I will try to acquire at 50 times the monthly average, although there are circumstances that will cause that ration to be adjusted (like shale production within its first year, will skew the value upward, or a well that is being drilled, but is not yet producing). You as a seller will try to obtain something in excess of 50 times (like 80 times). There are other factors and methods to value your property. Other's will no doubt chime in with their excellent advice.
Carolyn, the location within the county has a significant impact on the value of the minerals, and minerals in Andrews County can be quite valuable. I suspect by posting your message that you will begin to receive private messages from mineral buyers seeking to learn more about your property in an effort to convince you to sell. My advice would be post the description of the property publicly in this thread, so that we can advise you on what activity is going on in that area, and folks can chime in about what purchase prices they've seen. Beyond property location, there are a number of other factors which influence value, such as the terms of any oil and gas leases that the property is subject to. I would also consider reaching out to one of the forum sponsors that handles this type of work.
Carolyn, if you provide your sister's name, I will be happy to take a look at the Andrews County Consolidated Appraisal District, and let you know the value they place on the property. That site will also identify the location within the county, in support of Wolfcamp Shale's comments.
The minerals are in block 3 section 33 and 27. Here is the full description.
004882 R COVINGTON "33" 80040226 WILLIAMS, CLAY/SPRABERRY (TREND AREA) PSL BLK 3 SEC 33 ACRES 451.4000
.001465 R ORSON 27 80040430 WILLIAMS, CLAY/SPRABERRY (TREND AREA) PSL BLK 3 SEC 27 ACRES 643.0000
.004883 R ALLBRITTON 80040002 WILLIAMS, CLAY/SPRABERRY (TREND AREA) PSL BLK 3 SEC 28 ACRES 320.0000
004882 R COVINGTON 33 "B" 80040784 WILLIAMS, CLAY/SPRABERRY (TREND AREA) MURPHY M BLK 3 ACRES 0.0000
quarter percent lease I believe, but I would have to double check.
Carolyn, here's a quick and dirty. You asked for advice on the sale price in the area of your production on a net mineral acre basis. I don't know how many net mineral acres you have, but you can divide the following estimates by your known net acres to determine the amount you are looking for.
The Andrews County Consolidated Appraisal District appraised your producing properties at $10,105 for 2015.
Using the present value of future revenues method, I estimate a middle value of $36K (so if you have 9 net mineral acres, that would equate to $4,000/net mineral acre).
Perhaps there is someone else on this forum who has purchased or sold minerals in your part of Andrews County -- approximately 8 miles east of the town of Andrews. Your property, primarily Section 33 had additional wells permitted in 2011, but not drilled, so your property has untapped potential. This is not a professional mineral appraisal (that's another avenue for you). I am providing this information based on my own personal and professional experience, recognizing I have just done a minimal amount of research. This will provide you with an order of magnitude. Market value is what a reasonable buyer offers and the reasonable seller accepts -- that encompasses a very wide range of values.
I hope this helps.
Thank you. That was very helpful. 2014 and 2013 were nearly 3 times 2015. How will that factor in?
I suspect your 2016 tax appraisal (assessment payable by Jan 2017) will be less than the 2015.
Unfortunately I believe you are right. If the calculation are correct it will be difficult to sell at such low prices with recent memory of nice profits. Especially knowing there is a permit for a new well in the mix
Carolyn, in my opinion appraisal district data is not a reliable source for valuation as it does not take into account future production potential, and instead focuses only on current production activity on the property. In other words, the tax values swing wildly when new wells are drilled. The vast majority of properties with old vertical wells in the midland basin are appraised for pennies on the dollar compared to what they are worth when a horizontal drilling rig shows up. If you are set on selling them, I'd suggest reaching out to a group that markets mineral properties.
Hi All,
I inherited less than 1 NMA in Sections 11, 12, 13, 18, 19, 20, 21, 22, 23 All in Block A-52 in Andrews County.
Since this was long ago, I’m sure we will have to prepare a Stipulation on Interest and have other heirs in the chain sign and file that with Andrews County.
My question is, since it’s less than 1 NMA in each section, is it really worth the effort and expense of doing so? Are there buyers out there whom would be interested in a portion that small?
Any feedback is appreciated!