Replies to This Discussion

Permalink Reply by Muddigger on February 16, 2010 at 7:31

No, But I'll sell em 5% of my 0 royalties for $2,000,000

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landownerPermalink Reply by Henry on February 16, 2010 at 8:59

Nancy,
There are plenty of legitimate companies that purchase royalties. There are also scammers out there too. Make sure you know what you are doing, before you sign.

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landownerPermalink Reply by Spring Branch,mineral owner on February 16, 2010 at 9:02

I agree with Henry........there are plenty of both. ....legitimate and scammers. Always best to know who you're doing business with.

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landownerPermalink Reply by ken hatcher on February 16, 2010 at 9:07

I wonder how they came to the 5% figure?

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Permalink Reply by Bob on February 16, 2010 at 12:28

A better question would be what is an acceptable figure to just sell your rights. When you are up in age a little bit and the price of gas being what it is who knows if they will fully develop this thing while I am young enough to even enjoy it. I have to say the royalties on the first well are not exactly life changing. Plus I have a feeling it will be quite awhile before another one is drilled. What do some of you knowledgable folks think is a fair price per acre to to sell mineral rights.

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landownerPermalink Reply by Bobi Carr ("parker") on February 16, 2010 at 12:35

Anyone wishing to sell or buy would be well advised to visit with Skip.

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landownerPermalink Reply by Bobi Carr ("parker") on February 16, 2010 at 15:52

If a person is honest and upfront, as Skip is, there is no conflict of interest.

Obviously you have not dealt with Skip before.

Lot's of landmen on here are helpful, such as Skip, The Baron, Two Dogs, and Jim McConnell have good character.

I would be comfortable doing business with any of them.

I guess your Daddy and Uncle would never do business with someone who buys property and also sells it.

Broker is not a dirty word. It is someone who facilitates a sale.

Maybe your Daddy and Uncle should run, run, run to the soccer field.

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landownerPermalink Reply by Bobi Carr ("parker") on February 16, 2010 at 16:15

I can see how your Dad and Uncle would think that but they have not seen how much time these people have spent helping others. Yes they have businesses to run, but who doesn’t. That does not mean that they do not run their businesses in an honorable fashion. Whatever someone’s line of work they can do it ethically or not.

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Permalink Reply by Muddigger on February 16, 2010 at 16:25

I would never post bail for someone named Skip.

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landownerPermalink Reply by Garry on February 16, 2010 at 12:36

Good question,Bob

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landownerPermalink Reply by Bobi Carr ("parker") on February 16, 2010 at 12:40

It depends on where it is and who it is leased to.

Just like you couldn't ask the question, "how much does an acre cost in the Ark-La-Tex" and get a reasonable answer.

The three most important things in Real Estate are location, location, location.

In my opinion for royalties it would be "proven areas" with proven operators.

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Oil & Gas ProPermalink Reply by Dion Warr, CPL on February 17, 2010 at 6:21

Nancy:

IMO it would be important to educate yourself on what you're selling, and deal with a party that is willing to help educate you and honestly negotiate for what you are selling prior to closing the deal. Part of the reason that the Cobras of the world get so much flack here is that closing a deal by depositing a penny-ante draft that you received in the mail is just plain unctuous business practice for something of this value. Again, IMO, royalty sales should not be conducted on par with a solicitation / draft and/or a 'rebate coupon' check.

There are several ways to describe what royalty someone is buying. How it is described can have a great bearing on its market value. Are they buying 5% of the whole (or 20% of your quarter royalty) or 5% of what you have (on a quarter royalty lease, 1.25% of the whole)? Are they buying your production only, or all depths held by the lease? Does the royalty deed attempt to establish a covenant running with the land, or is it just attached to the lease? If you are in production, is the offer a flat figure per acre (or royalty acre), or is it based on a multiple of production (e.g., derived from paystubs paid on your RI). All of this should (and will) have a bearing when one is faced with a royalty sale negotiation.

Several members have posted blog entries concerning this issue. Start with these. Then, if you are interested in selling royalty, shop around a bit before seriously considering an offer. Skip will be forthright with you on what you are doing, whether or not you consider any possible offer that he could make as acceptable. He has made his services available to the community in good faith.

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