Hi,
I’m very new to the world of mineral rights so forgive me. My mother has gotten some info in the mail more than once regarding mineral rights to a plot of land in Pennsylvania that she didn’t even know existed. Her mother’s family is from the area but I have no way of knowing at this time where the land is that her grandfather was supposed to have owned.
She has gotten more than one letter regarding a payment, and the amount is changing each time. This time she is communicating with a company called Foss Resources LLC. She’s keeping this quiet though so I don’t have much information. Looking on here I can see that mineral rights are very much real but i have two questions: first, what is she getting herself involved in with the selling and getting a buyer involved and second, does anyone know anything about Foss Resources LLC? This whole thing doesn’t sit right with me and feels like she’s either getting A: scammed or B: will be ripped off by some shady buyer. Any advice or info is appreciated.
Often if mineral rights are producing, they will offer to buy you out with your own money that has already accrued. Someone needs to do more research. Quite possibly you could have the lump sum and an income for years.
Is this an offer to buy her rights or is this an operator trying to pay her royalties that are due? Many buyers have found back royalties and want to buy them (for a discounted value). If she has real royalties, then she probably would want to get that straightened out first.
Find out the exact description of the acreage. ask the offering company.
Ask the offering company how they got her name and what title research that did to get to that point. Ask them for a copy of the paragraph that details it.
Once she has the basic info on where it is and what they want, then she can search on the PA treasurer’s unclaimed funds site and see if there is anything there under her mother or father’s or grandparent’s or other relatives names. Have her ask her family if they are getting offers.
She can also go onto the PA oil and gas commission site and find out if there are wells on the acreage. You may have to help her with that.
Do not let her sign anything until she knows exactly what she has and what is going on. If the ask is for a sale, slow down a lot and find out why they want her acreage. If they are trying to get a Division Order to her, then they are trying to pay her royalties and that is a good thing.
Thank you. I’ll try to talk to her and get more information… as far as I know they are trying to buy the rights which makes me wonder, if they’re offering as much as they are, then what’s the REAL worth? I imagine they try to undercut as much as possible.
Well I guess none of it matters. She already signed a document, seems like she signed rights away for one payment to a buyer and I don’t even know if she’ll actually receive that money either.
Thanks for the info. I’ll probably never know the real value. She didn’t know what she was getting into. I’m disappointed but not surprised.
You shouldn’t always assume the buyer is getting a better deal than the seller. There are risks associated with mineral rights ownership and acquisition the buyer is taking as well. This may include defected title (no ownership), potential the asset never gets developed/dormant minerals, costs incurred for tile, curative(clearing title from original owner to present day), etc.
You need to do what makes sense for your situation. When determining value, you typically need to consider the following: Leased/Unleased, % of parcel (do you have leverage in negotiations with operator to lease, Held by old vertical well (will never be leased again), Non-Participating Royalty Interest (can never be leased), exact location/positioning of parcel (could be cut out of a unit or stranded), volatility of gas/oil prices, if the asset starts producing revenue, management/accounting if it starts producing revenue, cost of out of state tax returns (if you do not live in PA), time value of lump sum vs. waiting.
Bottom line, the mineral buyer is looking to make an investment and of course would like to make a return. Very similar to a real estate investment, stock equity, etc., the buyer hopes/believes the asset will go up in value over time. They are typically spreading a wide net to offset the risks associated with specific parcels. Taking the variables of ownership into consideration, not all parcels are equal in value if in the same county. Ultimately, it is what someone is willing to pay today and whether you want to spend the time and money to figure out potential buyers, file necessary documents to clear title, hire landman to confirm ownership, negotiate a lease with operator (if applicable), etc.
I would love to get a random call saying that I own mineral rights somewhere. It likely took a lot of time and resources to determine that and potentially would have escheated to the state if that never happened.