We have had an unsolicited offer to buy our mineral rights. I have never heard of the company nor do I have any idea what those are selling for. They sent a bank draft and a deed they want us to sign and return before activating the bank draft. Any guidance would be appreciated.
I get those, too, and probably from the same company. My experience is that those offers are usually quite low. That’s why they try to entice people with the bank draft, which is unacceptable itself.
I would never hand over a signed deed without getting a check in hand. Also, I would never take a first offer without getting much more background on the information on the company offering, who they are working for, what other activity is in the area, is there pending drilling and royalties that you might be walking away from, etc.
Any time I have received an unsolicited offer, they know something I don’t know and they are going to make money off of me. I would like to even the playing field a bit before entering into negotiations.
A good example of what any particular royalty interest is worth is to compare it with what it would take to get a comparable yield/return in another type of investment. For example: If you are receiving an average total of $12000/year in royalties from your leases, to get the same ROI in a U.S. Treasury bond yielding 3%, you’d have to have $400,000 invested. Of course this isn’t comparing apples to apples, as the bond interest is going to be more stable over time.
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Thanks for the responses. We get these all the time too. But this particular one was a higher than the others. Problem is, our royalties have slowed down to barely anything. But usually these type of offers come when something might be getting ready to happen. Anybody know anything going on down in Karnes?
Do you happen to know the exact Location, The current Operator and Lease Name would help as well.
I got the wierdest offer last week for one of my properties that I’ve ever gotten. The property/lease has had one well completed on it, about five years ago. My DI on it is .00083, and it returned me the sum total of $2.78 in royalty interest in the month of April. The offer for the mineral rights on it was for $31,682.23. To me, this seems like an astronomical amount of money for a 350 acre property that is currently producing next to nothing. Even if a new well was brought in on the property, at normal production rates for the EFS and with that DI, unless the PPB doubled, there is no way it is ever going to recover that amount of money in the next few years. The offer was made by a company out of Austin, Texas, called Hill Country Mineral Partners. Anyone here wish to proffer an explanation for why they would make that kind of offer (also, why the exacting amount, right down to the pennies?)
Who sent the offer with the draft? Mind sharing what it was and location?
They know something you don’t know and it may be planned horizontal drilling, so get fully informed before doing anything. Lots of buying companies out there who are gobbling up acreage at low prices and flipping to larger conglomerates who are planning on making a profit from future drilling.
It’s a mute point, as I do not think these people were ever serious about the offer. I’ve left two phone messages and sent them two emails expressing an interest in it, to which they have failed to respond, and that was ten days ago. Considering the limited size and configuration of the property, the best possible scenario that I can see is a re-frack of the existing horizontal. But even if they did that, and the price went to $100 PPB, I still can’t envision how they could recover that much of an investment, with that DI, in any reasonable amount of time.
They will certainly ask for your most recent check stubs and then “modify” their offer. It’s a game they play to get your interest.
Generally these kinds of offers are sent out based on tax rolls. It may or may not have been a real offer, or might have been a bait and switch type deal as someone else suggested.