TODCO Properties, INC

Oklahoma Mineral Rights McClain County, OK
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I am new to this. Live in California. My questions:

  1. Is TODCO legitimate? If so, I received an initial letter of offers of 1. $400 per mineral acre (3 years)@.8125 net revenue(3/16 royalty) or 2. $250 per acre for interests delivered @ .80 net revenue(1/5 royalty) or 3. No Bonus and .75 net revenue(1/4 royalty oil and gas lease (3 years)

How in the world do I know what to do? All I know is we prefer the highest royalty payment. Can someone say which choice is best?

Thank you all! Janet

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Hi Janet. TODCO is a legitimate brokerage company. Not sure who they are buying for. Kinda depends on the area of McClain County. If you share your section, township & range, we can probably help you a little bit with what values that are being paid in the area. From your preference, option #3 is the better of the 3 as 25% royalty is better than 1/5th or 3/16ths. Many companies are now paying a bonus with the 1/4th royalty option. Again, depending on the location.

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Thank you, however I am taking a risk if I choose the 1/4 choice, as what if the well does not produce?

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You are correct. The entire oil & gas business is a “risk”. How to manage that risk is the question that each person has to answer for their own situation. If you have a large amount of acreage, MAYBE the choice is to hedge that risk and take something in between. If the bonus consideration doesn’t make a financial difference in your life, take the 1/4th royalty and hope for the best. Nobody and I mean nobody, can tell you how many barrels of oil and mmcf of natural gas are under your minerals. They can only guess by using the wells in the area as a guide. All geologists and petroleum engineers have erasers on the end of their pencils for a reason. Hope this helps.

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I’ve received lease offers from Todco recently. They generally lease on behalf of the operator, as opposed to a lease broker that’s trying to flip the lease and carve out an interest for themselves. IMO they are a legitimate outfit, they’ve been in the industry for awhile. As far as picking which royalty option, I tend to wait closer till pooling before I lease. Usually that’s when you’ll get a better bonus or rate. I chose to lease at a 3/16th on a interest I have in McClain County 4 years, the bonus they offered back then was A LOT. The operator never drilled a well, I came out pretty well. On this same interest, the royalty bonus rates have dropped significantly. I plan on electing a 1/4 royalty no cash bonus once the unit is pooled.

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