Quietly in some more remote parts of Weld County, interests held by family members of many generations past are now seeing significant production. With many successful horizontal wells from Noble Energy, Whiting, and others, the message from a long lost great aunt or grandfather to “hold onto these, they may be worth something someday,” are becoming a reality. Many of these interests have never seen production and as such the title routinely stops back in the 1940’s-1960’s and due to diligent efforts many generations two or three times down the line are being located. At the same time, there are folks out there attempting to take advantage of production unbeknownst to these long lost family members.
Be Careful of Offers to Purchase
Companies such as Noble Energy are understandably in many instances unwilling to disclose the amount of funds in suspense due to liability concerns. Unfortunately this leaves many family members willing to sign on the dotted line to some third party offering to buy their rights due to the shear dollar numbers being offered. However, the conduct of these third party buyers can almost be categorized at predatory, especially when many taking into consideration that many of these owners are elderly. Armed with a cross section of information from the recorded documents compared to Colorado Oil and Gas Conservation Commission production reports, these buyers are offering pennies on the dollar relative to the true value of the rights. In one of the more egregious offers, the buyer’s offer compared to the amount of funds in suspense and projected production suggested that the buyer would recoup the entirety of their purchase price within six to eight months—everything after that was profit for the buyer--returns on that type of investment undoubtedly beat all other investments out there.
Protect Yourself and Arm Yourself with Information
If you are approached or have mineral rights in Weld County, and are approached with an offer to buy, do your homework. Call the operator of wells in the area and see if they will disclose the funds in suspense. If will not disclose the funds, then contact an oil and gas accountant and/or attorney team to make some estimates for you. If you are truly interested in selling, be sure you’re getting a fair price. Also, avoid signing over a deed or other documentation conveying your interest until you have funds in place. Ask for non-refundable money down if a company want “time to run title” before they pay out on a sale—don’t allow a company to grab your funds in suspense, but then fail to pay you. Be careful about the documentation associated with a sale. Also, be wary of offers to lease, which may in fact be offers to purchase. Some companies that lease and purport to be an operator are instead actually only disguising the lease as a purchase option.
If your great aunt or grandfather did good by holding onto that interest, don’t fail them by letting go at the last moment just when the tide is turn as they told you many years ago.
Jenna H. Keller, Esq.
Keller Law, LLC (www.kellerlawllc.com)
Jenna H. Keller provides legal services to farmers, ranchers, rural property owners, and severed mineral interest owners in the areas of estate planning, natural resources (oil, gas, wind), real estate, and water in Nebraska and Colorado.
The information is for general information purposes only. This should not be substituted for legal advice and should not be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or reading does not constitute, an attorney-client relationship. You are encouraged to contact an attorney for legal advice concerning the information provided.
