New to this. Getting lots and lots of letters from brokers / flippers and operators. Offers for purchase vary considerably. Anyone have a low / average / high price per NMA in this area?
Thx
JC
Hi, Jesse!
As luck would have it, I had someone send me some information about Mineral Interest in the N/2 of Section 9 just the other day and I have a company looking at it.
Whatever you own there, it is probably worth A WHOLE LOT OF MONEY. More than you want to discuss here in the open Forum.
If you will click on my name where it appears in BLUE and send me an invitation to become A Friend on The Forum, I will be happy to discuss your questions with you more privately.
I advise that you NOT sign anything or even verbally agree to anything until you know much more than you appear to at the moment.
Hope this helps -
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
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Jesse,
Your minerals are in a very active area, and Cimarex Energy recently (this month) obtained two drilling permits for horizontal oil wells on your property. Cimarex is a great operator, and your purchase offers will likely increase in size and frequency in the coming months. In addition, you'll probably start to receive phone calls and private messages on this forum from folks wanting to buy your minerals. I'd just sit back and wait for the wells to be drilled. There is a reason all of these companies want to buy your minerals, and it isn't to lose money. Best of luck!
Thanks for the reply. Just trying to figure out at what number it makes sense to sell and invest vs waiting on royalties and being subject to operator deciding when and how much to produce. Any advice would be greatly appreciated. The property has been in my family for generations. Trying to make the best decision I can with good information and data from people like you that know way more than I do.
I'm guessing that some of the offers are at or greater than $20,000 per acre? To put that in perspective, it would take somewhere between 800,000 - 1,000,000 barrels of oil and associated gas production to yield that amount of money if your lease royalty is 25%. In the section to your east there are two wells that have produced about 475,000 barrels of oil in just more than 3 years. With natural production declines it will take those wells several years to hit the 750,000 mark but there is certainly potential for more wells in the future. Hopefully this helps give you some perspective as to what might be a good offer.
There are sections to the north, south, east and west of you that have over 10 wells/permits in them. Cimarex is one of the best operators in Reeves County, and it is to their advantage to produce as much oil as possible from your wells. I don't think that you'll be disappointed holding on to these.
Hello, I have ownership of section9 block c6, and have received several offers for purchase (not really considering) and lease. How would I assess the credibility of these unsolicited (read: I am skeptical) offers. Thank you.
Hello Marcus. A lot has happened since I posted last year. The offers keep going up and up as we get closer to Cimarex completing the wells and infrastructure. Two wells should go on-line within 30-60 days from what they tell me. If it takes 10 years to realize the purchase price being offered then I will sell as I can’t wait that long. I’m wondering in general whether the average acquisition price per acre is what percentage of the expected total return. If they offer 20K/acre now then does that mean they expect a return 2, 5, 10, 20 fold in 10, 20 years?
Hi, Jesse. It’s tough to say with any level of certainty, but I don’t think it would take 10 years to get your $20k per acre out of those two wells. It all depends on what oil and gas prices do and how strong those wells are. I’d expect it to take 5 or more but that’s just a guess. I’d say most buyers are looking for at least a two or three-fold return over the life of the investment. That may sound like a pretty good return but if takes decades to achieve then the time value of money makes it less so. Don’t get me wrong, they still do okay if that happens but most people want a quicker payoff of course.
Hi, Jesse! I saw where you asked last July. Why I’m getting it just now, I don’t know.
If you can describe the specific lands you have an interest in and how much interest you own in them, I can calculate what your interest in the unit will be. Then, whenever production begins you can use that decimal interest to calculate how much of the oil and gas are attributable to your interests.
Could be the $20K per acre will be your first check!!!
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Hi Charles, I have 18 acres in the N/2. My family owned the N/2 but recently sold off about 104 to OneMap. 25% royalty on the 18 nma. Same operator had a Gas Well on the property that did pretty good for 6 years or so but I noticed that they shorted me by about 3 nmas on the division order back then. This time I want to make sure my decimal percentage is based on the nmas actually owned.
Thanks, Jay
Hi Charles, The lease we have with Cimarex is for 320 acres or the N/2. In calculating factional interest for say 18 acres would I use 18/640 or 18/320? I had been under the impression that all owners in the section shared in royalties but read something on this forum that indicated it was based on the lease. We have the lease and the wells are on our property. I had assumed .25*(18/640)5040,000. Is this correct or would it be using the 320? Thanks, Jay
Hey Tooke! Why can’t I “friend” you?
Hey, Cindy!
The Forum apparently doesn’t allow for “Friending” anymore.
Kenny, the very wonderful original Founder of The Forum, and the other Monitors may have come to the conclusion that people were being taken advantage of by the predators out there or something.
I can’t argue with anything they decide. Lot’s of Jerks out there…
I have written you a note to the two email addresses I have for you from the other year. Hope one gets to you!
Always the best -
Charles