Offer to ‘buy’ mineral rights from Riley Oil on Texas, Yoakum County property. This is same property as am now receiving royalties from Riley. They started 1st well about 2 years ago-receiving royalties on 2 wells so far. I don’t know why this offer? Any ideas? Also, out of blue, offer for Yoakum County land from land company where long time Apache wells are. The offer matched the tax assessment on the land. Both offers within a month of each other.strong text
My suggestions only: If you are getting multiple offers to buy then the buyers know something that you do not know. They fully intend to make a profit off of buying your acreage. They know the perceived value of it but they will not be offering that amount. The offers that I have received have been generally close to the discounted value of the current well(s) production (They discount for the time value of money over the life of the production and apply a certain price deck to the assumption). Sometimes far less. (I have had the engineering done for my wells, so know what the predictions are.) The offers do not include the perceived value of any future drilling. Some buyers buy and hold for the future, some buyers flip, some really know what they are doing and some do not. If I were you, I would look up your area on the TX railroad commission website to see if there are permits nearby or wells that are currently drilling. Most of my offers have been right ahead of the bit and I have been very happy that I did not sell.
Our family holds onto their minerals (so far), but everyone needs to make their own decision based upon their needs. There are possible capital gains taxes associated with a sale and buyers usually do not mention that item. You are taxed if you have royalties which you probably do know about.
Here are some of the steps that I would take if I were to consider an offer and to see if the buyer is legitimate and well funded.
-I would look the buyers up on Bizapedia and see how long they have been in business. No problem in being a new company, but I am looking for the owners to see if they have experience and their BBB rating.
-I would look up the buyers on LinkedIn or other sites to see what their training and background is.
-I would look up their website. Are they willing to say who they are? Who is funding them? What do they do? etc. If they are not willing to reveal who they are and how they are funded, then I would not deal with them.
-I would ask if they are willing to put 10 percent of the purchase price in an escrow account as a good faith measure. What third party is holding that escrow for them? Attorney? Accountant? I would want a PSA (Purchase Sale Agreement) in writing and an agreement that the remainder of the payment will either be paid to the escrow account and my third party who is holding my deed will turn it over when the check clears or it will go to my direct direct deposit account before my third party will be handing over the lease or deed. NEVER hand over a signed deed without getting paid. If anyone wants that, walk away!
I would read the offer very carefully to see if they have added language about other acreage that we had not particularly talked about. I have seen some very bad language in some offers that is very disingenuous.
-I would try to get at least three offers that fit that criteria and then take the best. Or go through an auction site (there will be fees.)
-You can keep the minerals and get the revenue for the first few years. You can sell the minerals. You can sell part and keep part and split the risk. You can put the minerals in your will or give them to a charity, etc. You can enjoy the revenue during your life and then know that others will benefit in the long run.
-I would consult with my attorney and accountant before any sale to determine if there are consequences that I might not have thought of.
Personally, I hold onto any minerals in hot areas. There may be multiple reservoirs and I would like to keep that profit for my family. You do what is best for you.
Thank you so much for the info. I certainly will not sell anything without further research. Thank you again.
You should be VERY WEARY and careful with doing business with Riley. Pretty sneaky snakes. Are your Apache wells by chance on Section 770?
I can give you a lot of info on Riley. They claim to be from Oklahoma City and that’s where their corporate office is located, but the guy that’s really in charge is in New York and they’ve had some really shady dealings amongst themselves and with others.
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