Reeves County Property Analysis for Keyser Partnership

July 2018  

The Offer: June 27: Ann Kennedy with Fortis Minerals in Houston called me and said she would offer $32,500 / acre for our interest in Reeves county. We have 10 acres (Net Royalty Acres I believe) so the offer will be for $325,000. (Our Culberson offer was for  $13,298 per Net Royalty Acre or $19,945.21 per Net Mineral Acre)

Current Development: We, Keyser Partnership, do not currently have production in Reeves county  (Although the Arnold lease with several conventional wells, produced for many years starting in the mid ‘80’s). About two years ago we received a lease bonus for ten net acres in Section 30. We received $2,500/acre or $25,000. They have 3 years to drill with an option to renew the lease for another 3 years. Section 30 is about seven miles east of Culberson county. (We have 43.15 Net mineral Acres or 79.72 Net royalty acres in Culberson County.)

Future Worth: According to my Culberson analysis our Culberson interest is worth about $10MM.  Assuming the Reeves properties have the same potential, then our Reeves interest is worth 1/8 (NRA,  80/10) to an 1/4 (NMA,  40/10) of the Culberson interest or  $1.25MM to 2.5MM over the next 10 years. 

Active drilling in S30: Looking at Section 30 on the RRC GIS viewer, there is a permitted horizontal well, API 38936971, on the far East side of section 30. This will be the 1st horizontal well under Section 30. Google search found this reference in the “Developmental Wells” section of the April 15, 2018 Midland Reporter Telegram:

Anadarko E&P Onshore LLC
Helios 56-2-30 #1H
Phantom (Wolfcamp)-Horizontal; 399 fnl, 370 fel, Sec 31, Blk 56, T-2, Abst. 591, T&P RR, 1.44 se Orla; TD 12000; API #42-389-36971 Permit issued 4/4

W2 of NW4: While the borehole is in Section 31, the well goes north for 1 mile N&S under the extreme E side of Section 30. As we have interest in the W2 of the NW4, we would not get money from this well. Sections are divided into thirds for purposes of compensating mineral owners from horizontal drilling. We want a well to be drilled in the west 1/3 of section 31 to encompass our property.