I have surface rights in Ward County on 76.5 acres which is becoming very active. Presently I am working on an agreement for well pads price per acre, price per rod for pipeline, roads, and power lines, they also want to create a caliche pit, and pay for cubic yard removed, and this all is to be actively being constructed in the next few months. I am trying to figure out rates and damages being paid in the area. I also could use some help thinking of other items which should be taken into consideration. Presently I am being told that the University of Texas System - University Lands is the going pricing which they are wanting to pay, are these figures fair? If your not familiar with these rates, this schedule is easily found doing a google search. ( I also tried to attach it to this message, this is my first time trying, so I hope it works). How long should the agreement be made for 5, 10, 15, 20 years, what is common? 2323-Rate_Damage_Schedule.pdf (73.9 KB)
Hey, Eugene -
I'm sure the University Lands rates are more than fair - they are a pretty professional group and oversee thousands upon thousands upon thousands of acres for the State.
It is actually pretty professional of the company to use their rates, when they could easily try and negotiate for less.
I haven't looked at the rate list yet, so I don't know if it is covers the subject, but you may want to research what Caliche is going for these days. It is probably in much higher demand today that ever before - you should try and get top dollar.
One other thing I would suggest. You wrote that you owned SURFACE RIGHTS. If you do not own mineral rights, I have seen overriding royalties negotiated for by Pad Site Owners - up to 3% in any well drilled from any Pad Site on their property.
Have you thought of that?
Charles
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
Hi Charles,
The University Land rates appear to be OK, but with all activity in the area I am hoping to find some solid figures to work with, presently the University Lands rate schedule which is available is a year old, from Sept 2012, much has happened since then which could justify some rate changes. I am also being offered rates that seem to follow the damage schedule, but there are some areas of the University Lands which also specify consideration rates, and either damages or considerations, the schedule list a starting or minimum price. I am still waiting for better details to work with as far as well depths, pipeline diameters and how much, power lines, etc., before I sign any agreements. So, I am making an effort to do as much research and get help from others ahead of time which hopefully allow proper negotiating with a solid and current values (I do not desire to be a prude and push too much, but I also want to be sure I am not the one being pushed, I am only working with small potatoes on my 76.5 acres, but it is much needed income for my family).
I tried to do research on caliche values, but once again it is a wide open range when looking on the internet. Hopefully someone in the Ward County texas area can provide me some recent figures.
I have thought of seeing if I could get some sort of royalties, but was not sure how to word this, so the terms overriding royalties is a good descriptive approach. I had thought about royalties due to the fact of being a Surface Owner, it looks like you get the best you can when making your agreement, afterwards there is no risdual income to follow. I was fortunate when they brought the caliche into play and will be paying by the cubic yard, but I have no idea how many cubic yards, and is this only utilized in the first couple months of area construction? I will follow up with your suggestion and ask for 3%, that would be great if it was to work out.
Please follow up if you have other values or thoughts for consideration!
Thanx very much for your feedback and help!
Chuck Flaute (I use my middle name, which also is Charles)
Hey, Chuck -
Try the National Association of Royalty Owners (NARO) and groups like that - they may have more information as to current rates for things. Google the name to find them - their website address is not naro.com, somebody else uses that.
As for what your Caliche is worth, have you tried searching for commercial companies in Texas and New Mexico selling caliche? You could find out what it would cost you per cubic yard to buy it - that would give you a place to start. You might also want to ask the companies how much it cost to haul it - 5, 25, 50, 100 miles. That's bound to be an issue to the company and might allow you to up your price to some degree.
Have you thought of selling water? It's a big issue nowadays, with fracking taking hundreds of thousands of barrels of water per well.
You can invest in setting up a facility and sell it yourself, contract with an Independent third party to do so, or, if they (whatever company you are dealing with) are interested, negotiate to allow them to drill wells for their exclusive use.
If it is with the subject company or a third party, make sure and require them to drill to a different zone than you presently use for your existing water wells, charge them for the water they use and require that they leave you their well(s), with casing left intact, when they leave [Their industrial surface equipment will probably not be anything you will be able to practially use - you'll have to install your own].
Here's something pretty cool for you:
Sign up and Sign In - it's free. This is a very interesting recent message string about water wells and sales that you might find informative.
A couple of other thoughts:
You can require them to leave any pits that they build in their drilling activities or create from mining your caliche for your use as tanks or ponds. Even require them to make them "pretty" before they leave.
I even have provisions I can send you requiring them to allow you to pay the earth moving people (the guys with the heavy equipment) to stick around an extra day or two to do whatever you want - grade your roads and drainage ditches, build you tanks or ponds where you want them, level a pesky hill or build one - whatever you want. Only you don't have to pay them for travel time with all that heavy equipment. Big savings in that.
Speaking of roads, have you considered requiring them to build and maintain roads where you want them? Do you want them to use your existing roads (the least expensive option for them) or do you want them to build a road down one side of your property or down the middle of your property, or wherever, for your future use when you eventually divide the property among your children or subdivide it otherwise?
Fencing is another issue you need to consider. So are Access Roads and Driveways - you can require that they build and maintain their own.
Chuck -
It just struck me that I am going about this all backwards: What is it that you do with your 76.5 acres?
Raise Cattle or Sheep? Is it crop land? In Timber? Under lease to someone else to do any of the above?
I can help address your potential issues better if I know what you are using it for.
Sorry for not having thought of that earlier -
Charles
Charles,
I simply purchased this for a future investment. I purchased 15 lots attached, 9 lots on one side of dirt road, the other 6 are directly accross from the 9 which are side by side, so they are all attached with a dirt road down the middle. This is plain open range property, but easy to get to, nothing special (until now), it is close to the Pecos River which is within a 1/2 mile due West. I purchased this approx 5 years ago and are located about 10 minutes north of Pecos. I have no plans of usage at this time for the properties.
I do have a plat for some piliminary plans which show a desired new road going down one side of my property, so I like this and it does add another road and cost to them, some profit for me.
I will follow up on some of your other advise above,
Thanx Again!
Chuck