Replies to This Discussion

Permalink Reply by William Howard Pritchartt on January 21, 2015 at 6:32

I own minerals interests and I own royalty interests.  I have bought minerals and royalty and I have sold them as well.  I can only say that for me that each time I have sold minerals or royalty it has been a valid reason for doing so due to the unique situation at the time and circumstances to divest.

I will say that I too receive the letters of solicitation to purchase my minerals.  As a mineral buyer I am disgusted by most of the ones I receive.  I have never received a "check" with the letters and would be shocked if anyone else did as a "sight draft" is the form of payment standard for leases, mineral/royalty deeds.

When looking over the "proposed" deed sent by these criminals included with the letter do not be surprised if you find in the fine print wording such as "Grantor conveys to Grantee all of the mineral/royalty interests owned or claimed by Grantor in the county/parish of ___________, in addition to the interests described herein."

I buy minerals and royalties from time to time and DO NOT mail out solicitation letters.  The individuals who do and incorporate the wording with a "catch all" clause should be tied to a tree, doused with gasoline and I will furnish the matches to torch them.

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Permalink Reply by William C. Morrison on January 21, 2015 at 6:51

Years ago, about mid 1980s my family sold a portion of their royalties.  Our place had been leased at $25 an acre while next door that place leased later, a year so later, for $4500 an acre.  We could not renegotiate since a few of our acres were in production.  So we used a Lafayette attorney to seek a royalty deal.  The family sold a portion of the royalties for $250,000.  About two years later, the leasor failed to renew the lease.  So that was literally all the money they got out of the whole mineral lease.  The production well sanded over and was closed and abandoned.  I think my father and his siblings got maybe two years worth of royalty money off the well.  Since that time we have gone through two additional leases, the last lease expired in July 2014. 

We sit atop the Edwards Shelf, if anyone really knows where it is.  But all the gurus tend to draw a line on the map and we see to come in the same spot all the time.  So we sit and wait.

But our family did sell royalties, made some money and recovered all out mineral rights when the lease expired.  It was an astute thing to do.  Perhaps we were lucky in that deal, but it worked for us.

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Permalink Reply by William Howard Pritchartt on January 21, 2015 at 9:00

You were smart as well as lucky.

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Permalink Reply by William C. Morrison on January 21, 2015 at 9:12

It was the family that was smart.  We were lucky in that the law firm we used was Edwin Edwards, etal.  And we all know about his personal reputation.  So we were indeed very lucky.

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Permalink Reply by William Howard Pritchartt on January 21, 2015 at 9:19

So did Governor Edwards pay the family a fair price and the name shown on the royalty deed as Vendee or was it taken in another name?

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Permalink Reply by William C. Morrison on January 21, 2015 at 10:51

That was circa 29 years ago.  All I know is the family was well satisfied.  And we recouped the royalties when the lease was not renewed.  So it is one case where sales of royalties paid off handsomely.

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Permalink Reply by William Howard Pritchartt on January 22, 2015 at 13:16

My great grandfather and his business partner Tomas Wade acquired Stamps Plantation in Wilkinson County in the early 1900's. The heirs still own this property and oil was discovered on Stamps in the early 1960's.  The very idea of divesting anything but timber by select cut harvest was always considered an abomination.

However, about 15 years ago five Frio Gas wells were completed as producers on our property with one having multiple pay sands.  Being a landman with the majority of my career involving the Frio, Wilcox, Tuscaloosa A Sand and TMS in Wilkinson County I thought it might be wise to divest one-half of my royalty in these wells except the well with multiple pay zones.  I explained to my co-owners that these were low volume gas wells that usually produced about two years on a single producing sand.  I had negotiated a sale on one-half of my royalty limited to the producing units limited to the productive zone of each well for a three year term and was being paid on a thirty six month payout based on the initial test of each well. I was not advising them what to do but offered the opportunity to join in on the sale.  The Wade heirs declined but my family joined in the sale.  The wells lasted two years and the royalty reverted to us.  

By the way, I was hoping my jest about Edwin Edwards and the royalty sale catches his attention. When he ran against David Duke his platform was "As governor would you prefer a crook or the klan?" and "Unless they catch me with a dead woman in the trunk and a live naked boy in the back seat of my car, I am home free." 

He is without a doubt the most honest politician I have seen in my 59 years and I admire him and you gotta love a guy with guts like his.  He got a little too much power with delusions of being invincible. 

I am glad you are out of "Club Fed" governor and wish you well and hope to shake your hand one day.

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Permalink Reply by benny on January 22, 2015 at 9:51

Is selling minerals or royalties ever a good idea ? Hummmm, why don't you ask the CEO's of Exxon or Chevron or EOG or Devon or any of the other thousands of extremely smart businessmen who sell them all of the time. Yes it is OFTEN a good idea to sell them if you are getting a fair price for them. Much more often than many on here would have you believe. They hold onto them for dear life while the rest of the world passes them by and Nat Gas prices go from $12 to $3. Now that was a great move holding onto them wasn't it. Well played. Watched the value go down 75%.

Would you hold onto a stock that goes from $12 to $3 ? Or would you sell at some point and hope to buy lower in the future ? Well this is the same thing. It is just an asset, treat it as such. Don't let emotions make financial decisions. Buy low, sell high, be happy. :)

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Permalink Reply by William C. Morrison on January 22, 2015 at 10:06

Interesting.  And what do you get as a return on your money market accounts now days?  I do not know about you but it does not exceed one tenth of one percent for me.  So even if royalties drop to $35 a barrel, you get more than one tenth of one percent on your money.  Cash is king.  No cash is crap.  Selling is very final.  No more return on you money, in this case your mineral royalties.  I do not see anybody out rushing to sell their mineral interests without some due consideration.  It is not a simple decision.

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Permalink Reply by Spring Branch,mineral owner on January 22, 2015 at 11:49

$100,000 put in a S & P 500 index fund 5 years ago would be worth well over $200,000 today/

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Permalink Reply by William Howard Pritchartt on January 22, 2015 at 15:30

I never said it was a simple decision.  I said it was a very serious decision which should be researched and advice sought by expert disinterested professionals who stand nothing to gain other than a consultation fee.  There will be many who regret that they did not sell for a specific term in the deed for prices offered in the shale formations we may  never see again.  I sold and made the royalty for a far more lucrative amount than what would have been derived fro the royalty if I did not sell.  Since the deed was for a three (3) year term and as long thereafter as the well produced in paying quantities the interest reverted back to my family.  Land is the source of all wealth and Stamps Plantation has been very good to all of the owners.

I feel land beats money market accounts hands down as an investment.  Your thoughts Mr. Morrison?

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Permalink Reply by Two Dogs, Pirate on January 22, 2015 at 16:08

Many mineral owners do not live in the same comfort zone as Chip, Howard and Spring Branch so they need to take their advice with the understanding that the upper 50% don't look at things the same way as the lower 50% of the population in the USA. Any one considering selling minerals should consult a professional before making a deal and make sure that you check the professional out to make sure that he/she knows oil and gas and is not a crook. Some folks that don't have both pockets full of money may find themselves into situations where they may need money just to survive. 

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