A broker acting on behalf of XTO Energy has offered (a 3 year lease on our small piece of the Subject Stephens Cty. property) $1,778 (for all 3 years) for our undivided mineral or royalty interest in this 160 acre property (entire tract owned by multiple other family members).
Our interest (net) is said to be 2.9629 net acres of the larger tract.
A royalty of 3/16 of the net proceeds from oil, gas, liquid hydrocarbons etc. if produced is also part of the lease proposed by the broker (R.D. Williams--Ardmore, Oklahoma).
I asked about possible counter offer after we do some more "digging (no pun intended)" and he said generally his company will not negotiate but then he added if we get a better offer from another broker or company I should let him know.
Any thoughts, suggestions, reputations of broker/XTO, property involved, etc. would be greatly appreciated by this Eastern greenhorn (tinhorn? not a Longhorn!!).
Sorry if too much/too little info has been provided.
Thanks,
Michael
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Counter 3/16 and $1500/acre. Tell him you are going to call Bearcat and tell them the same thing.
From my dealings, RD Williams is a good company. I have not heard anything to suggest otherwise of them, Bearcat and XTO. Make sure you get all the usual clauses also.
Rick..thanks for response but have no idea what/who Bearcat is.
Also do brokers offer low ball for promising sites NOT for an oil company but for themselves (the Broker) so they can then sell the same (leasehold) rights to an oil company at an extreme profit at a later date?
At this point I do not know whether this tract is promising or not. I called Williams ready to discuss possible counter offer but they have not returned call yet. I'm assuming Bearcat is a reputable broker. Are there other reputable brokers in the Stephens County area?
Finally, is there anything resembling a Blue Book to establish approximate values per acre of Stephens County tracts?
Continued thanks in advance.
Yes brokers make offers for themselves so they can flip the lease to an operator. Sometimes they make excuses for not paying promptly or use a bank draft that gives them about 6 months to flip your lease before payment is due, and frequently they will record the lease and stiff you for the bonus payment, hoping you will let it go or they can simply release the lease when you inform them you are ready to sue them. Be wary and do your homework. Good luck. Ps. I would see no reason why they couldn't offer up front to broker your lease for a fee or small percentage and be up front the whole way. I guess their minds don't work like that.
MICHAEL A said:
Rick..thanks for response but have no idea what/who Bearcat is.
Also do brokers offer low ball for promising sites NOT for an oil company but for themselves (the Broker) so they can then sell the same (leasehold) rights to an oil company at an extreme profit at a later date?
At this point I do not know whether this tract is promising or not. I called Williams ready to discuss possible counter offer but they have not returned call yet. I'm assuming Bearcat is a reputable broker. Are there other reputable brokers in the Stephens County area?
Finally, is there anything resembling a Blue Book to establish approximate values per acre of Stephens County tracts?
Continued thanks in advance.
Bearcat Land Inc is another company leasing in the same section. I think both companies are actually leasing for the operators instead of speculating and flipping but I could be wrong. Most of the time you will look at the leases and they will be 90-95% of companies like this with a few flippers thrown in. Then you can see where the flippers reassign to the leasing company. However they ARR working for the oil companies in their best interest, not your best interest.
I'm surprised you have not already been contacted by Bearcat. They have been leasing in that section for quite a while and appear to have most of it locked up.
No Blue book that I know of, but I do know that area is leasing for more than the $600/acre they are offering you. And that $600 is much better than what was being offered 5 months ago. You should be able to negotiate way closer to the number I gave you than the offer they gave you. Counter with 3/16 $1500 3 year no extension, Depth, Pugh, no deducts, etc. It should bring a minimum of $1000 but I’m betting closer to $1250.
Rick...many many thanks. Some of the other family members have already taken the first offer--yes Draft only included none have been paid yet and there was something that warranted more looking into after my discussion with RD Williams guy.
He seemed sincere but not necessarily completely forthcoming.
I plan to call Bearcat myself, tell them the proposal/location and perhaps see if they would be willing to play "can You Top This".
Anything you ever need to know about the Philly area I'm your guy!! And "Go Okla City" in the NBA!!
Mr. Kennedy..did not mean to overlook your response as a subject of my sincere thanks. I'm calling Bearcat first tomorrow then calling RD Williams asking why RD Williams has not yet returned my call.
I plan to come back to this Thread with the eventual resolution--I hope I'm not outsmarting myself here by not simply grabbing their offer--or with more questions.
Thanks again.
No thanks necessary and I realize that you are in the middle of the steep learning curve, I was only offering some background anyway. The most important thing is to get securely paid, or it doesn't matter what kind of deal you made. There must be a large sum of money or you hold the principle dear if you have to sue an oil company. Make certain you have a lease that protects you and guaranteed payment.
Spoke again to RD Williams, he said XTO (the company) pays Drafts every 30 days or I could present it--if we even agree on Lease terms--through a local (NJ) Bank but he said Banks charge steep processing fees.
The Lease itself is between the family and RD Williams (not between the family and XTO). He said RD Williams did not flip leases for profit.
He also said if we decline down the line we may have some "pooling" options (including to later grant rights at "market price") but we'd be gambling no development/drilling at all will occur on the site therefore no $$ at all (whatever market price is at that future point).
Also called Bearcat (voice-mail, no response yet).
Ongoing thanks.
Beat The (Miami) Heat!!
Just about ready to accept..I am perplexed that Bearcat has not returned my 2 "important" voice mail messages. Was hoping to have something to compare the RD Williams proposal with. Other family members have returned Bank Draft(s) related paperwork (about 2-3 weeks ago) but have not yet received actual funds for leasehold rights.
Bearcat finally responded (actually I called a third time). They were gracious with their time and are putting together some type of counter proposal. Bearcat person said they represent Continental Oil and that they already have obtained Leasehold rights from most of owners of this tract.
I'm the last "holdout" for my family's piece (they all immediately went with RD Williams). We shall see.
I'm glad to have heard from Bearcat, who indicated RD Williams' offer was seriously "lowball" in several ways.
