A West Texas ranch spreading across 37,000 acres in Reeves and Jeff Davis Counties is closer to being sold.
El Paso Businessman Paul Foster has placed a $32.5 million offer on the KC7 ranch, which sits along the foothills of the Davis Mountains near Interstate 10.
Foster made a "stalking horse bid" on the West Texas property. The bid essentially "sets the floor value of the asset," said Bernard Uechtritz of Icon Global Group, the real estate sales firm overseeing the sale of KC7.
"It's a floor value and all of the other people that are qualified and interested for bidding for the ranch can now come at a designated time and place — which is going to on the 23 (of January) in Dallas — to potentially overbid that amount," said Uechtritz.
If Foster is outbid, he will receive a "breakup" fee of $1 million.
Apart from the lodge on the property— which spans across 10,000 square feet and was first built in the 1800s— the winning bid will also receive the water rights for the land.
"On its surface, it's a great recreational, even agricultural type ranch...but the subsurface part is really where the value is," said Uechtritz.
In an article in the Fort Worth Star-Telegram, Uechtritz said if the buyer of the property decides to make use of those water rights it could yield big returns.
“I have seen data which indicates up to 400,000 barrels a day of water production is possible,” he said. “Current frac water rates in the area range from sixty cents to two dollars. Let’s say conservatively this water is delivered at twenty cents. This could mean a payback as much as $70M a year for decades. I might be married into an Aggie family and only have a 10th-grade education, but even I understand that kind of math, and these are big numbers," he said to the Fort Worth Star-Telegram.
The West Texas property was previously offered for sale at more than $50 million.
The property, once owned by the Darden family, is part of a bankruptcy case.
Icon Global Group is also overseeing the sale of the 70,000-acre Lely Ranch near Big Bend State Park.
The Lely Ranch is the largest Texas ranch up for sale in the state.
