Mom has some small mineral rights in the Dawson/Martin county areas. She's always getting offers to buy her mineral rights. The offers are usually equal to 3x to 5x the yearly income she currently receives.

Recently, she's gotten calls from a firm in Dallas, offering her more like 30x to 50x the yearly income. Same guy told her that he knows of no current plans to drill in the area.

Is this a scam, or does he know something we don't? There are producing wells now, as well as acreage that hasn't been drilled.

Definitely seems to be "too good to be true", or there is a big drilling boom on the horizon?

The answer would be very location specific. The whole area is doing well, but recent nearby proven production would most likely be the cause for an increase like that not an area wide boom.

What kind of offers is momma getting on her Remington 700 300 SAUM?

SanAntoneAg said:

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What kind of offers is momma getting on her Remington 700 300 SAUM?

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Dad had a Savage Model 99 in .300 Savage, but I gave it to my son.

My parents are getting lots of offers to sell in Navarro County. I suspect it's speculators looking to cash in on solar since lots of solar farms are popping up nearby. Some offers up to 7500 an acre for black cotton land. It's never been worth that much. Anyone have experience with this?

50x would be hard to pass up, wont lie.

schmellba99 said:

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50x would be hard to pass up, wont lie.

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It is tempting, but what kind of fool would buy an asset with a 50 year payout?

Especially given zero guarantee of the price of oil next week, much less in 2073?

It smells of scam or insider knowledge

Interesting. I'm not in exploration, but pretty well known that almost no money is being spent on exploration in the US. So unlikely a new discovery from exploration.

Could be as someone said and good producing wells nearby. But even that seems unlikely…. also pretty commonly reported that the drop off from prime acreage to non is pretty significant, one of the reasons some privates slowed down last year. Inflation and higher D&C costs with slightly lower producing wells don't generally go well together.

Edit to address the drilling boom: definitely do not see that happening. Not enough rigs, casing, frac crews, etc. to ramp up much more than where we are now even if people wanted to.

CanyonAg77 said:

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schmellba99 said:

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50x would be hard to pass up, wont lie.

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It is tempting, but what kind of fool would buy an asset with a 50 year payout?

Especially given zero guarantee of the price of oil next week, much less in 2073?

It smells of scam or insider knowledge

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A smart person would do some research and figure out if it is worth the sale.

Cash in hand now....can be more than future earnings if played right.

Ask this over on the business & investing page, thread called "Houston, we have a problem." Those guys know a lot about this topic.

Who is the current operator on the lease?

2040huck: We also own Navarro Co. Acerage and get an offer a month.

50X current income: DO IT!! Forty years in Permian Basin as Independant I can tell you that 50X your current income is incredibly hard to beat, especially considering the Time Value of Money. Money today worth much more than money in the future. The incredible production decline in the horizontals is worth considering, also. 50X is too good to pass up, again, the Time Value consideration makes this VERY attractive!

Or, Hedge your bet, sell half and keep half.

SOLD! congrats op!

Tell them put a contract in front of her.

I get a lot of phone calls about me as well as family members. I never return those calls. I also get letters with a $X......Every one of those letters will have a similar phrase..........

Pending an economic study......

2040huck said:

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My parents are getting lots of offers to sell in Navarro County. I suspect it's speculators looking to cash in on solar since lots of solar farms are popping up nearby. Some offers up to 7500 an acre for black cotton land. It's never been worth that much. Anyone have experience with this?

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OP is talking mineral rights. You're talking surface here.

It would be helpful to know what this is on a dollar per mineral acre basis and to know whether or not the minerals are already leased.

$5k/mineral acre- I would hold it
$50k/mineral acre- I would probably sell

In between it depends.

Streetfighter 02 said:

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Who is the current operator on the lease?

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It's most likely Endeavor or Diamondback in that part of the world. Could also be Pioneer, but all my buddies that farm in that country have Diamondback leases all over them.

2040huck said:

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My parents are getting lots of offers to sell in Navarro County. I suspect it's speculators looking to cash in on solar since lots of solar farms are popping up nearby. Some offers up to 7500 an acre for black cotton land. It's never been worth that much. Anyone have experience with this?

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My parent's place is surrounded by the solar farms in Navarro Co. (Between Richland and Wortham). Someone tied to LDS church is buying all the land as a front to the solar farms, or the LDS is in the solar business).

jwoodmd said:

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2040huck said:

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My parents are getting lots of offers to sell in Navarro County. I suspect it's speculators looking to cash in on solar since lots of solar farms are popping up nearby. Some offers up to 7500 an acre for black cotton land. It's never been worth that much. Anyone have experience with this?

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OP is talking mineral rights. You're talking surface here.

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Yeah. Probably should have started a new thread. Just thought maybe someone had run across this and knew how it worked. it's not just the surface rights they want. They are looking to buy the property in fee. I suspect they know something about future development

Don't mean to derail, but LDS is big into diversifying and they have several solar projects on their properties (I know for sure in TX and FL)

You mention a Dallas company. Would it happy yo ve Vanguard something? They call (and now starting texting) fairly often

Streetfighter 02 said:

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Who is the current operator on the lease?

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There are a couple of producing wells, some land leased but not drilled.

I believe the companies are Callon, Jo MIll, and Beach

K_P said:

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It would be helpful to know what this is on a dollar per mineral acre basis and to know whether or not the minerals are already leased.

$5k/mineral acre- I would hold it
$50k/mineral acre- I would probably sell

In between it depends.

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Sorry, don't recall all the splits and acreages. I think this is about 300 acres of land, and I think mom owns around 5-6% of the mineral rights. Don't want to publicly talk about her numbers, but we're talking getting into 8 figures for the entire 300 acres.

So side note, my brother happened to run into several folks from that area over the past week.

One is an employee of a gas production company working in the area. He claims that there is an incredible amount of drilling poised to occur in the area north of Ackerly (towards Lamesa) in the next five years. The area east of highway 87 is the focus, and this is in that area.

Another was a cousin's husband. His dad was a successful farmer who owned several farms and acres and acres of mineral rights south of Ackerly. They have lots of wells already, and have 20 more that are planned to be drilled in the next year or two.

And if my brother understood correctly, and the numbers are right, they just sold mineral rights (somewhere in the area) for $87,000 per acre. I'm a little confused on why they would sell the rights, as opposed to leasing, but that's how the story got back to me.

htxag09 said:

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pretty well known that almost no money is being spent on exploration in the US. So unlikely a new discovery from exploration.

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Exploration is still kicking. It could be that one of the nearby operators is onto a new play and is leasing up acreage before results go public. Happens all the time.

Technically leasing your minerals is a sale subject to the terms of the contract. I would speculate leased since they have royalty income property now. Likewise someone with a history dealing with oil and gas companies is not going to want losing control over the surface by selling the minerals.

The buyer could defend his statement of "no known plans to drill" as actually meaning "there aren't currently any permits filed in that spot yet". No one offers what you are describing without there being a good chance of something going down.

That being said, if you give me the location I can look and see what's been permitted or drilled recently in the area

Also forgot to mention that the cousin's husband claims that Seismograph activity is very high in the area, with vibraseis (?) trucks running constantly.

The area has been in production for 80 years. I find it interesting that they need new seismic data. Can only assume that they need data from different depths than before, or that technology has improved since the lst exploration.

Birdbear said:

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htxag09 said:

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pretty well known that almost no money is being spent on exploration in the US. So unlikely a new discovery from exploration.

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Exploration is still kicking. It could be that one of the nearby operators is onto a new play and is leasing up acreage before results go public. Happens all the time.

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Global exploration CAPEX has shrank every year since 2013. 2022 was roughly 25% of the spend vs. 2013. And that's global, which includes new plays in South America and Africa. North America onshore is even worse, it's dropped about 40% in 2022 vs. 2021.

So, maybe I worded it poorly that no money is being spent, that's obviously hyperbole and incorrect. But I absolutely wouldn't say it's kicking. Every industry event I attend talks about the lack of spend in US Exploration and what that will mean in the near future.

Quote:

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2022 was roughly 25% of the spend vs. 2013

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When the left cries about "record oil company profits", I wonder if the high profits are partially due to the reduced money being put into exploration.

It's likely based on some line of sight to horizontal development, and I'd guess her current income is from old vertical wells.

The guy buying could know something concrete, or just know that it's a potential "fairway" for an operator to drill. Either way, the future income stream is a lot more than it is currently.

DM me if you have any questions, I work in the minerals business here in Midland.

It's definitely part of it. Basically spending across the board is down (obviously not accounting inflation and increased prices in that regard). But you don't see the spending in exploration, you don't see the throw every penny back into new/more rigs, frac crews, etc.

And yeah, a lot of that is is because of the pressure from the government and investors. Lots of threats to reduce the size of the industry, so why reinvest if you don't know how long you'll be around to recoup that reinvestment?

A good analogy I heard is the last decades were like being in college and getting student loans to cover everything. Now, the industry has its big boy pants on and is being forced to repay those student loans (aka showing returns to the stockholders in stock buy backs, reducing debt, increased dividends, etc.).

CanyonAg77 said:

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schmellba99 said:

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50x would be hard to pass up, wont lie.

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It is tempting, but what kind of fool would buy an asset with a 50 year payout?

Especially given zero guarantee of the price of oil next week, much less in 2073?

It smells of scam or insider knowledge

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A lot of times these blind offers are for the entire tract/Unit. For example, it is one section, 640 acres and the offer is for the full 640 acres and in the small print it will say subject to title verification, etc. the price will be adjusted based upon what is actually owned. DM and I can look into it further if you would like.

Thanks to you and others who have sent PMs.

I don't think she is inclined to sell. Partially because she is in excellent financial shape, partially because she doesn't want to mess with it, and last, she would rather pass it down to family.

This is the company making the incredible offer, BTW:

https://www.eprenergy.com/