My brother and I have received two offers in Sections 16, 21 and 28 (T08N, R08W) for a buy out of family mineral rights in Grady County. The offers vary considerably…Without knowledge of “net acres” and “percentage of royalty” it is difficult to evaluate these offers; I have no archival information from a grandfather I never knew…How can I best pursue this? The companies involved can only give a “per net acre” price with a minimum 3/16% royalty. Thank you for any suggestions.
The best place to start is with the county records. Grady County | OKCountyRecords.com | County Clerk Public Land Records for Oklahoma
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
Ask the agent how many net mineral acres he is carrying for you.
Many offers to buy are right before drilling and tend to be a “test” amount to see who will bite without knowing about pending activity. The buyers intend to make a profit off of those new wells.
Continental Resources has a horizontal permit for the Strauss 1-21-28XHW. The location of the well indicates that they are leaving room for multiple infill wells at some point. Continental just drilled the Lowe 1-27-34XHW just next door. It has estimated recovery at 40 BCF which is quite excellent. Your sections 21 and 28 are very attractive.
Continental also had a permit for the Hillary 1-8-17XHW just to the west of you. They have completed the well in the Woodford and the estimate ultimate recoverable is 19 BCF which is a very good well for that area. Your section 16 looks attractive to buyers.
Do you have clear title to the sections through your grandfather? Very important to make sure you do! If they are offering to “help you clear that up”, then big red flag! Are you currently getting royalties on the shallower wells in those sections. If not, then you need to contact the operators and get into pay status. The buyer wants those royalties and the royalties to come. I doubt they are offering what they are really worth.
Is your grandfather or next generations listed as respondents on the current pooling applications for those sections? If so, you have to pay attention to the pooling dates as you only have 20 days in which to answer the order. If you don’t know, then I can give you the case numbers to check the lists. Move quickly to put yourselves into a more powerful position.
if it were me and given the pending activity, I would not sell right here.
Thank for the links, Richard. These are much appreciated.
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Ms. Barnes,
Thank you for your very thoughtful response.
I do believe we are on the “lists”, as we have received much correspondence from the attorneys for Continental. I never was aware of any “pooling dates” that required a response, however…
Neither of the offerers are returning information on “net acreage” that they have discovered. I suspected they are waiting for a positive response on an offer before they do a deep-dive into the actual holdings. And no, we are not receiving any royalties, currently.
Many thanks again. Clearly, I have more work to do…
Listen to Martha. She’s given you excellent advice, especially the last sentence.
Thank you, sir. I am inclined to agree.