My siblings and I received an offer to sell our mineral rights at $9,000 per acre on an assumed 3/16th lease. We agreed but today the purchasing company came back and said we are currently under a 1/8th lease and the offer has decreased to $6,000 per acre.
First, I have letters from 4 other companies offering MORE per acre to sell for 1/8th lease than if I had a 3/16th lease. Why would this company be different?
Second, I understood mineral acres and royalty acres were separate so to sell one is NOT selling the other.
Just curious, what Township and range? That is like 9N 4W for example. There are lots of section 31’s. Most of the time people would probably give 2/3 of a 3/16 lease for an 1/8 lease. 3/16 is 18.75% royalty and an 1/8. 12.5% royalty, so that makes some sense. Are the other 4 companies making you an offer for an 1/8 lease and another offer for a 3/16?
Sure the letter doesn’t say “1/4th”, not “1/8th” where you are saying they offered “MORE”?
As for minerals vs. royalty- Royalty is the revenue derived from an oil & gas lease on the minerals.
For the most part, when you sell minerals, you are selling the royalty that may accompany them.
$6000/ac for 1/8th is the equivalent of $9000/acre for 3/16ths.
Always important to compare apples to apples, as they say.
I own 5 net mineral acres in McClain County, OK. I inherited them from my mother when she passed away.
In 2017, I was offered a lease on this property and was paid a total of $10,000 (2,000 x 5) which I accepted and chose the 3/16th royalty option.
Last month, I was offered $9,000 per acre to sell these mineral rights given the 3/16th royalty was in place. In the process of validating the transaction, the purchasing company uncovered the mineral rights were still with the company my mother had signed with, under a 1/8th consideration, and dropped their offer to $6,000 per acre.
In your opinion, can I back out of the sale deal since the terms I believed I was currently under are obviously incorrect?
Unfortunately, I can’t give you any legal advice, but will say: It depends!
Obviously, the “deal” you speak of isn’t the same “deal” as the new “deal” that is now on the table.
Under these circumstances, I know I wouldn’t have a deal. But again, it depends on what the documents
you signed say about changes to the “deal”.
How old is your mother’s lease and is it HBP by any old well(s)?
Chuck… it all depends. You can challenge what they are saying. Ask them to prove that the old lease is still holding. Because if it was, you should not have been able to lease again, unless the oil company somehow missed it.
They would need to prove it by showing the original lease, as well as production that is holding it. That’s the only way it could still be valid.
Once they provide that info, look it over. If you need help reach out on here or message me personally and I can help! Best of luck!
Chuck, Last ditch effort to say, don’t sell the Minerals, just leave them to your kids. 100 years ago our Oil Operations didn’t know what Horizontal Drilling was, and look at the now. That is when My Grand Father Started.
His Mantra to my Mother and her Brothers and Sisters was You can sell the Land, but Never, Never, Never sell the Minerals. God Bless,
Chris Wilson
I agree Chris… unless there is a real hardship requiring selling rights, just hold on to them. Not only for the kids but for yourselves. Your mineral rights will likely not be worth any less in the future than now… should you need to sell later. Contact from those mineral buyers can be a positive sign of future activity in your area, especially if there are old abandoned wells around ripe for horizontal drilling. And who knows what other new drilling technolgy could appear in the future. You can have a landman look up surrounding sections for old abandoned wells or current wells to get an idea of potential underground.
Take your time making any decision.