If you’re considering selling or in the process of selling to someone else, drop us a line before you sign anything. We can typically give you a competing offer within 24 hours. We can also help you identify potential problems, or just act as a third-party sounding board for your decision.
A net mineral acre (NMA) is net ownership expressed in terms of “mineral acres”. It’s a way to standardize gross acreage to allow for apples-to-apples comparisons.
The formula is: Tract Size in Acres (Gross Acres) × Ownership Interest = Net Mineral Acres.
For example, full ownership of a 10-acre tract of land equals 10 net mineral acres (100% × 10 Acres = 10 NMA), while ½ ownership in the same tract of land equals five net mineral acres (1/2 × 10 = 5 NMA).
Royalty checks are generally received monthly, and are determined by the division of interest (DOI), the production for the month, oil and gas prices, and any operator deductions (e.g. transportation charges). For new wells, royalty checks are usually sent out several months after production starts. Before an operator will commence payments, it must establish each owner’s DOI.
The division of interest (DOI) is the owner’s share of production, expressed as a decimal from 0 to 1, from the well or unit. The DOI is usually based on a title opinion, which is drafted by an attorney based on the public records of the county. A division order is an instrument confirming this percentage, usually mailed to the owner a couple months after completion of a new well.
The formula for DOI is: (Net Mineral Acres / Unit Acres) × Royalty Interest = Division of Interest.
We value mineral rights by trying to estimate (1) when they will produce, (2) how much they will produce, and (3) how certain we are in our estimates. Then, we apply a discount for the time-value of money ($1,000 today is worth more than $1,000 in 10 years, because of the magic of compounding interest).
So for instance, if we are 75% certain that an operator will develop some mineral rights and, if they do, the new wells will ultimately produce about $300,000 worth of minerals, we would discount our valuation to $225,000. Then, if we expect the new wells would not be drilled until 3 years from now, we would apply a further discount to account for time-value of money.
If you’d like help valuing your minerals, you can always reach out for a no-obligation same-day quote. We are happy to help landowners value their minerals, and if we’re interested, make an offer. It never hurts to get a second opinion.
Caddo is an investor in oil and gas mineral interests across Texas and elsewhere. Caddo takes a “portfolio approach” to investing, meaning that many similar investments are made to spread the risk across those investments. For this reason, Caddo can more easily afford to take risks. The more investments that Caddo makes effectively reduces its overall risk. Therefore, the risk to Caddo is less than the risk to the individual mineral owner.
People who sell to Caddo typically cite four benefits:
Our process. Caddo offers a fast, easy, and efficient way to sell. We are transparent in our dealings and we close deals quickly.
Our prices. We don’t choose to offer on every deal we see, but if we like a deal, then we pay top dollar for it.
Our funding. Many other companies are essentially middlemen that “flip” deals. They get landowners under contract, and then spend days or even weeks trying to find a buyer. If they can, they buy and flip the deal to that buyer. But if they can’t, they have to back out of the deal. But unlike these companies, Caddo is self-funded, so we can stand behind our offers.
Our people. Caddo is a family business, and we treat our customers with respect, fairness, and professionalism. We do not use deceptive tactics like bank drafts or eye-popping offers on acreage you don’t actually own. We stand behind our offers. We do what we say we’re going to and treat people the way we want to be treated.