Unnamed party wants to buy my Mineral Rights in Converse County WY

Wyoming Mineral Rights Converse County, WY
1

I have mineral rights in a number of counties in Wyoming:

County

State

Description

Natron

WY

Township 34 North, Range 84 West, 6th PM

Section 33:

SE1/4NE1/4, NE1/4SE1/4

Section 34:

SW1/4NW1/4, NW1/4SW1/4

10 net acres/160 gross acres

Freemont

WY

Townsip 36 North, Range 94 West, 6th PM

Section 23: NE, E/2SE, N/2SE

Converse

WY

Township 33 North, Range 69 West, 6th PM

Section 3: E/2SE/4

Converse

WY

Flatop Federal 32-10

NE/4 of Section 10, Township 33 North, Range 69 West 6th PM

160.0 acres as to the Teapot Formation only

1/4 of .447368% of 76% of 80/160 N.P.R.T.

I was recently contacted by a landman from a company that shall remain nameless for now, representing another company that shall also be nameless.

They want to BUY my mineral rights in Converse, and are also interested in Campbell County, where I have no holdings.

I inherited my mineral rights from a paternal uncle who was a wildcatter in the 1930s-1960s. He had lots of mineral rights and one gusher - but he sold the well a week before the gusher came in, and kicked himself for it until the day he died.

In the 50 some years I've held these rights, I've probably grossed less than $10K from signing bonus and royalties. The Federal Flatop nets me $100-$200 a year at the moment. Nothing to write home about!

All of a sudden, this landman pops up with "money left over from 2014" and is offering me $28000 for my 8 NMA (I'm not sure what NMA I actually have - could be 4 and change). That is more than double my return for the last 50 years!

I asked a question and get back a "lets do the deal and worry about the small stuff later" answer. Boy, does that set off alarm bells!!!

The company his company represents has one principal on record - Legalzoom.com Inc. Give me a break! OK, so somebody doesn't want the deep pockets outed. Thank god for the internet!

The questions is, what is suddenly going on in Converse that had got such a big burr under the saddle of so many?

My wife, a Texas girl, is from a family with oil money, but not her end. All this has given her Black Gold Fever, and she is off and running! She wants to fly into Casper and check out what is going on before we make a decision. I've got no problem with doing due diligence, or her going to Casper.

I also have no problem with missing the opportunity, since I've made next to nothing from these rights over the past 50 years, I won't exactly be missing anything if I go to my grave and pass on the rights to undeserving grandkids without making any more.

BUT, I would hate to sell out only to learn that the buyer hoodwinked me and made a killing after the sale.

So, any thoughts and/or suggestions? Know any local Converse Dowsing guides for hire?

Thanks.

Loren Latker

2

First, "NMA" means Net Mineral Acres.

Converse County has been in a new boom for the past 10+ years and there is a great deal of area that has yet to be explored. The Big Players in Converse County {Chesapeake Energy & Khody Land & Minerals} are continuing to lease minerals and continuing to drill the area. The real hold back to the area opening up at this time is the infrastructure for transporting the oil & gas from the region. As they build the pipelines, they will increase drilling.

As for selling the minerals, you have very little to gain in the short run if you sell them but if you keep them then you could have a great deal to gain if just one well is drilled. $28,000 for 8 NMA {$3,500 per NMA} seems very low considering that on a 3 year lease bonus of $500 per MNA {What I received this year} it will only take 21 years to make that $28,000. As prices go up and down that bonus could be a lot higher or a little lower.

Now if you get a well drilled on your minerals, the amount you receive can be astronomical. Remember what you said about your paternal uncle "he sold the well a week before the gusher came in, and kicked himself for it until the day he died.” To me that would be the ultimate reasoning for not selling. It would be so sad to sell then have the same thing happen to you. He left them to you for a reason and I am fairly sure that it had to do with you or your heirs someday "celebrating him" with that experience of having a "GUSHER".

Things to consider:

1) Those minerals cost you nothing when you inherited them.

2) Wyoming does not charge you taxes to continue to own those minerals so they currently cost you nothing to keep them.

3) You receive some funds because you do currently own them. {Never Look A Gift Horse In The Mouth}

4) If you sell them you lose any chance of ever owning part of a "GUSHER" your "paternal uncle" dreamed of when he originally acquired the minerals.

5) A Landman/Company with at best "SHADY" references wants them because he/they know of the activity in Converse County. If they weren't to make a lot of money from your minerals they would not be willing to invest $28,000 to get what you have. Tell them that you "MIGHT" consider selling them for $56,000 and see how they respond. If they even nibble on it or counter offer then you know they are attempting to take advantage of your lack of knowledge in mineral rights and the area.

If you do decide to sell then I would make damn sure you have THEIR FUNDS SECURED IN A ESCROW ACCOUNT PRIOR TO SIGNING ANYTHING!

Personally I have an ELEVENTH COMMANDMENT - "Thou Shall Not Sell Thy Mineral Rights".

If you do sell, please go to the "Marketplace" tab and get multiple offers from companies who are listed and also post your minerals for sale. http://marketplace.mineralrightsforum.com/ Also contact Khody Land & Minerals and Chesapeake Energy to see if they are interested. As for researching your minerals here is the link to the Wyoming Oil & Gas Conservation Commission. http://wogcc.state.wy.us/

Wishing You A Blessed Day,

Bill

PS;.I believe I had a conversation with your wife yesterday.

3

Here is an article concerning the future of drilling prospects in Converse County, Wyoming.

Especially read the paragraph below "Figure 1 Converse County, WY Oil and Gas Project Area" for what is projected for 2018 and 2027 for the Teapot Formation I know it was written prior to the down-turn in oil prices but still very important when it comes to what the future of Converse County has to offer.

New Oil & Gas Boom Paradigm: Reviving the Conventional http://unconventionalenergy.blogs.ihs.com/2014/07/30/new-oil-gas-boom-paradigm-reviving-the-conventional/

4

Hi Bill,

Thank you for all the helpful, and inspiring information. I forgot to mention in my original post that the company buying the rights is only 7 months old!

I've notified the landman that I won't be selling, even if I don't make a dime from my Converse County holdings in the short term.

With the new technology I believer our grandchildren and great grandchildren will benefit from the mineral rights, even if Annie and do not.

Again, thanks.

Loren

5

BRAVO!!!!! And y'all are so welcome.

Just instill into your heirs the importance to Never Sell the Mineral Rights.

My kids understand it and we have had talks to with the grandkids even though they are still young.

Anytime you need help, never hesitate to ask and this forum has a large number of very intelligent individuals.

Have a Great Day!

Bill

6

Sorry for not getting back to you sooner.

When looking at Mineral Properties, most people only think about the Oil & Gas Royalties but in Wyoming I protect all my mineral assets including reserving all rights to my Uranium, Coal, Coal Methane Gas & Bentonite Rights. These minerals can be worth a small fortune and if you don't reserve them when leasing then the oil company has full control of them when they lease and so often the royalty owner never sees a penny of the proceeds if they are mined/drilled.

Several other issues that most leases do not entitle the mineral owner are the condensate, distillate and other liquid hydrocarbons. Over the lifetime of a well, these funds can also produce a small fortune and normally never shared with the mineral owner. When I lease I demand royalties gross at the well head for all oil & gas and all condensate, distillate and other liquid hydrocarbons. Most lease are NET where the mineral owner is responsible for such cost as condensing, chemical for treating and the highest cost of transportation of the oil, gas, and other hydrocarbons byproducts. GROSS AT THE WELLHEAD means you are paid for every drop produced and before any operating expenses along with being paid for all byproducts.

I also insist on the Pugh Clause and will not sign a lease with the Mother Hubbard clause.

I hope this is a little more information that will help you in the future.

Have a blessed day,

Bill

7

Hi Bill,

THANK YOU!!! (Sorry for the delay in answering as well.)

Not only is the above information invaluable should a new lease come my way, but the very day you wrote the above, we got a call from someone at Chesapeake Energy, the company that currently is leasing my mineral rights in Converse County. My wife, who you spoke to, had reached out to them as well. He did some research and called back.

First, he too said not to sell the rights, and laughed at the offered price.

Second, he said they are putting in a new horizontal well on land where I own a percentage of mineral rights, 10 acres I believe. No wonder someone was buying up the mineral rights!

About 5 years ago I signed a standard lease, so once the well goes in, the lease is evergreen and can't be changed.

Still, he said by the end of 2015 my royalty payments should really take off and be very big. How big I don't know. Currently I netted $220 for 2014, so $440 for 2015 would be double. However, I'm guessing he means really, really, really BIG in comparison to what I'm getting now. (I'll believe it when I see it!)

He also said that there should be activity on the rights in the other counties that are currently inactive, including the other Converse County rights as well.

I'm going to put the mineral rights into a generational trust, with the royalties equally divided among the grandkids. That should keep the rights in the family, and bypasses the problem of dividing up the rights, some of which aren't currently producing. That way there won't be any Jealousy between the haves and have nots.

Thanks again for your invaluable advice.

Have a wonderful and prosperous 2015.

Loren

8

Before moving the minerals to a generational trust, I would first talk to an accountant/tax attorney with the way the IRS is changing the Estate Tax. Also, there is the cost of managing a trust especially by a bank that needs to be addresses. I do not recommend using a Bank & Trust to manage your trust. Personally I feel they are not diligent in protecting the mineral owner when it comes to negotiating leases; second is the expenses that they charge for every little detail which will put a major drain on the trust and third, Bank & Trust tend to have high employee turnover rates which puts the management skills in question and overseeing the details of the trust as directed and instead implementing a basic management skill set that is used for all trust. After the second or third trust officer, who will really read the trust and oversee it the way it was intended especially if it does not produce a large sum of money and also is that new trust officer educated on lease negotiation.

What we have are "Individual Trust" which were created by the "Last Will & Testament of My Parents" where each of us are trustee's of our own trust and where the minerals are split equally to each trust equally. The Generational Trust can become really cloudy when splitting them after the individuals named in the generational trust start passing away. Creating separate Individual Trust leaves equal shares to each heir and then they are split again only to the heirs of that Individual Trust. In the trust you can include a clause where you can protect the minerals from being sold for multiple generations or forever. Remember that minerals can be divided to the 6th decimal {0.000001} and they can be split where each heir gets equal shares of each mineral property.

One thing I do recommend is sitting down with your heirs and explaining "EXACTLY" how the trust are created, the responsibility of managing their own trust, how the minerals are split, the importance of learning what you have to know when it comes to negotiating leases and the importance of the "Eleventh Commandment".

By them managing their own trust, individuals are more likely to communicate with each other as leases are offered; less finger pointing when things are not going as intended because they are responsible for their own interest; and the biggest is there is more negotiating power when dealing with oil companies when several individuals have the capability of pooling interest in the discussions of royalties and bonuses.

I hope this helps,

Good Luck,

Bill



Loren Latker said:

Hi Bill,

THANK YOU!!! (Sorry for the delay in answering as well.)

Not only is the above information invaluable should a new lease come my way, but the very day you wrote the above, we got a call from someone at Chesapeake Energy, the company that currently is leasing my mineral rights in Converse County. My wife, who you spoke to, had reached out to them as well. He did some research and called back.

First, he too said not to sell the rights, and laughed at the offered price.

Second, he said they are putting in a new horizontal well on land where I own a percentage of mineral rights, 10 acres I believe. No wonder someone was buying up the mineral rights!

About 5 years ago I signed a standard lease, so once the well goes in, the lease is evergreen and can't be changed.

Still, he said by the end of 2015 my royalty payments should really take off and be very big. How big I don't know. Currently I netted $220 for 2014, so $440 for 2015 would be double. However, I'm guessing he means really, really, really BIG in comparison to what I'm getting now. (I'll believe it when I see it!)

He also said that there should be activity on the rights in the other counties that are currently inactive, including the other Converse County rights as well.

I'm going to put the mineral rights into a generational trust, with the royalties equally divided among the grandkids. That should keep the rights in the family, and bypasses the problem of dividing up the rights, some of which aren't currently producing. That way there won't be any Jealousy between the haves and have nots.

Thanks again for your invaluable advice.

Have a wonderful and prosperous 2015.

Loren

9

Hi Bill,

Thanks! Again, great information. It does help.

I had no intention of having a bank administer, and I'll take your answer above to the lawyer and make sure we set up the trust properly.

Take care and have a great day,

Loren

11

Soliciting is not allowed outside the Marketplace. I wouldn't do business with anyone who agreed to but refused to follow the terms of service as they are not good at keeping agreements.

12

Hey R W,

My apologies. I wasn't aware that I could not inquire about some potential leases through open communication on this particular forum thread. Not trying to ruffle feathers, just trying to help out some families that are without a lease to get back into one and get some money in their pockets. Again, my apologies. I will post in the marketplace moving forward.

We're a small, privately funded company. We don't send mailers or solicit. That's not us. We are all about personal communication and forming a relationship with lessors. That's the only reason I posted here.

Feel free to give me a call if you want to talk. My phone line is always open and it's easier that way for all of us.

Take care and have a nice Memorial Day Weekend. God Bless.