Seems like a scammer- any advice

[Max_Johnson1]

Hi all. New here and struggling to understand how to gauge whether an offer is fair or suspect.

First things first. We received this information from the gentlemen wanting to purchase the deed.

“You and your sister inherited a 1/8 Non-participating Royalty Interest in two 40 gross acre tracts, being a total of 80 gross acres: One tract in South One-Half of the South One-Half of the North-East Quarter (S2/S2/NE/4) of Section 53, BLock 2, H & T.C. Ry. Co. Survey, Fisher County, Texas…AND…the other being in the North One-Half of the South One-Half of the North-East Quarter (N2/S2/NE/4) of Section 53, BLock 2, H & T.C. Ry. Co. Survey, Fisher County, Texas.

Basically, this means that you and your sister both inherited a one-eighth (1/8) out of a total of 80 gross acres in this section, giving you a total of 5 non-participating royalty acres each. The “non-participating” part just means that you are not required to pay into a well if it is drilled. “

It goes on to explain:

“ > > I have attached some well data for the surrounding sections;

The first attachment is a map of section 53 and surrounding sections. The solid green dots are active wells. The green dots with the line through it are plugged wells that are not producing. The open blue circles are dry wells.

The lateral well that was drilled in section 56, to the southeast of your interest, started out as a good well, but has taken a huge dip in production. The attachment shows how many barrels per month the well has produced (the number on the left).

All of the wells in section 52, were “dry-holes”, meaning that they are not producing sites.

The wells to the east and southeast in sections 50 & 51 are either plugged wells (meaning they aren’t producing enough for profit) or they are dry holes also.

(I KNOW THIS IS A LOT SO PLEASE, BEAR WITH ME!!)

The wells to the north of your interest are averaging about 80 barrels/day. This may seem like a lot, but generally in order for you to see any substantial money back from these production values, an average good well will produce AT LEAST 400-500 bbls(abbreviation for barrels of oil) per day.

When a company drills a well in this area, it is costing between $5-$9 million. These drilling companies can require that they receive 60% of their drilling cost returns before you ever see a check (IF they ever actually drill on your property). Which means that at that lower production rate, it can take up to a few years for you to even get paid on the well.

Give me a call whenever you get back and I can walk you through the railroad commision website, if you would like and further explain things.”

This just seems suspect. So far the person has been very pushy and wants to make a deal on a short timeline.

Any advice or recommendations on what to look into. No one comes out of nowhere and just tries to buys something from you “with no real value” if there is t a catch.

Thanks in advance

Max

[Ellis]

I wouldn’t sell. The same thing recently happened to me and the lady was very pushy and kept upping the price she was offering. My gut said to say no thanks. I contacted a landman that I knew and he looked it up and said they are drilling all around you and maybe on your land too. Just wait a few months and you will probably hear something. I have royalty rights. Sure enough 5 months later i got a letter and I’m waiting to hear back on how much money i will receive. Everyone i talk to said never sell your mineral or royalty rights

[Richard_Winblad]

Welcome to the forum Max & Ellis.

[Dusty1]

Max

Without knowing more I wouldn’t call this a scam, but some of those quotes you posted seem off base enough to justify you being suspicious. If those were just signs of sloppy work or oversight then someone may be trying to mislead you. And gone into a lot of detail to do it.

Assuming you can verify that they are correctly describing the interest you own, below is what is RRC’s map is currently showing, with Sec. 53 outlined in red. You might compare it to the map they sent you.

Some of the points you quoted appear to match RRC’s map, like their statement that all the wells in Section 52 were dry holes. But what they didn’t acknowledge was that those wells were vertical wells drilled years ago to a different formation than the current horizontal Wolfcamp wells now producing in that area.

The statement made about the “lateral well drilled in Sec 56 to the southeast of your interest” is confusing because RRC’s map shows no horizontal well in Sec. 56, and that section is southwest not southeast of Sec. 53. Assuming the well they are referring to is the horizontal well drilled by Clearfork that extends from Sec. 54 through Sec. 55, RRC shows it started producing in February, 2022 and is definitely on a decline…like is common for those wells…but through March has cum production of 200,000 bbls and 325,000 mcf

Something that wasn’t mentioned in what you quoted is Browning Oil well RRC just approved the permit for. The drill site is shown at the southeast corner of Sec. 108 and the lateral is projected to extend about 13,000’ through the next two sections to the north. That permit was filed on 5/16/23 and RRC didn’t approve it until the 22nd, so the folks who contacted you may not have known about it, but I doubt it.

A couple of statements you quoted that also seem strange were, “The “non-participating” part just means that you are not required to pay into a well if it is drilled” and “These drilling companies can require that they receive 60% of their drilling cost returns before you ever see a check…”. Do a little research and I think you can confirm a non-participating royalty interest (assuming that’s what you actually own) means you don’t hold the executive rights, so you can’t negotiate a lease covering that interest, and that if the party who holds the executive rights negotiates a lease you wouldn’t share in the any lease bonus payment. But if a well is completed you would receive your share of royalties and, unless the lease that covered your acreage was very unusual, the operator wouldn’t have the right to recoup their drilling cost before they started paying royalties.

A basic point you might want to determine is, what is the current status of the mineral interest where you hold this non-participating royalty interest? Who holds the executive rights to it, is that acreage currently under lease, and can you find out what the lease terms are?

[Mineral_Owner5]

He thinks you and anyone that reads this is stupid! In over 40 year’s of Oil & Gas leasing I’ve never heard that a drilling company require that they receive 60% of their drilling cost before you get paid! Report this idiot to the State RRC!

[NMoilboy]

Sigh…don’t do that. Just don’t sell anything, simple enough. The RRC has enough actual stuff to do without having to delete your email or throwing out your letter or ignoring your phone call.

[G_A_Walters]

I own several interests in producing wells in Fisher County. I received a letter from a scammer last week offering to purchase all of my royalty interests for around the amount that I receive each month. It’s ridiculous that these people aren’t in prison.

[min4me]

When did you inherit and have either of you received any royalty payments? Before you sign anything, check the Texas Unclaimed Property fund site in the name of the individual you inherited from - both married and maiden names.

[Griffin]

I would add that you should also check the Unclaimed Property site for every state that the person you inherited from ever lived in or had mail forwarded to. For example, I recently found funds on the New Mexico Unclaimed site which were from the mid-1990’s. My parents had not lived in New Mexico since 1965, and those funds were not showing up on the site a year ago. The oil company apparently had an audit in 2022, and royalties belonging to my parents were identified and sent to New Mexico.

[Max_Johnson1]

@G_A_Walters

I own several interests in producing wells in Fisher County. I received a letter from a scammer last week offering to purchase all of my royalty interests for around the amount that I receive each month. It’s ridiculous that these people aren’t in prison.

Thanks- good to know we made the right decision.

[Max_Johnson1]

@Dusty1

Without knowing more I wouldn’t call this a scam, but some of those quotes you posted seem off base enough to justify you being suspicious. If those were just signs of sloppy work or oversight then someone may be trying to mislead you. And gone into a lot of detail to do it.

Assuming you can verify that they are correctly describing the interest you own, below is what is RRC’s map is currently showing, with Sec. 53 outlined in red. You might compare it to the map they sent you.

Some of the points you quoted appear to match RRC’s map, like their statement that all the wells in Section 52 were dry holes. But what they didn’t acknowledge was that those wells were vertical wells drilled years ago to a different formation than the current horizontal Wolfcamp wells now producing in that area.

The statement made about the “lateral well drilled in Sec 56 to the southeast of your interest” is confusing because RRC’s map shows no horizontal well in Sec. 56, and that section is southwest not southeast of Sec. 53. Assuming the well they are referring to is the horizontal well drilled by Clearfork that extends from Sec. 54 through Sec. 55, RRC shows it started producing in February, 2022 and is definitely on a decline…like is common for those wells…but through March has cum production of 200,000 bbls and 325,000 mcf

Something that wasn’t mentioned in what you quoted is Browning Oil well RRC just approved the permit for. The drill site is shown at the southeast corner of Sec. 108 and the lateral is projected to extend about 13,000’ through the next two sections to the north. That permit was filed on 5/16/23 and RRC didn’t approve it until the 22nd, so the folks who contacted you may not have known about it, but I doubt it.

A couple of statements you quoted that also seem strange were, “The “non-participating” part just means that you are not required to pay into a well if it is drilled” and “These drilling companies can require that they receive 60% of their drilling cost returns before you ever see a check…”. Do a little research and I think you can confirm a non-participating royalty interest (assuming that’s what you actually own) means you don’t hold the executive rights, so you can’t negotiate a lease covering that interest, and that if the party who holds the executive rights negotiates a lease you wouldn’t share in the any lease bonus payment. But if a well is completed you would receive your share of royalties and, unless the lease that covered your acreage was very unusual, the operator wouldn’t have the right to recoup their drilling cost before they started paying royalties.

A basic point you might want to determine is, what is the current status of the mineral interest where you hold this non-participating royalty interest? Who holds the executive rights to it, is that acreage currently under lease, and can you find out what the lease terms are?

Thanks for the lengthy response. So many things didn’t add up and when we got the guy on the phone he tap danced and was dodgy about all of the details.

[Max_Johnson1]

@Mineral_Owner5

He thinks you and anyone that reads this is stupid! In over 40 year’s of Oil & Gas leasing I’ve never heard that a drilling company require that they receive 60% of their drilling cost before you get paid! Report this idiot to the State RRC!

That’s kinda what I was thinking. Within 30 minutes of getting this info and a couple Google’s. I found this site and a number of other sources that led me to believe this had to be some sort of terrible con that targets naïve unsuspecting owners and basically steals their property from them.

[Dusty1]

I’m curious if you compared how the map that guy sent you matched with what was shown on the RRC map of that area that I posted. Was he just sloppy in his description or actually changed what’s really on the map?