Has anyone received in the mail in the last week or so a letter from Southwest Petroleum Company, L.P. saying they are currently purchasing mineral and royalty interests in several areas of Texas and would like to purchase the interest that I own and referenced on the enclosed Conveyance? They also included a Bank Draft for you to also if you decide to take take them up on their offer. They are from Dallas, Texas

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Here we go again.  Martha, Southwest Petroleum employs a means of solicitation meant to take advantage of naive mineral owners or those in financial distress.  We have discussed this company and this approach (used by a handful of companies) on numerous occasions.  You can read those archived discussions if you like by going to the "Search" box in the upper right corner of the page and entering Southwest Petroleum or Cobra.

In the early days of the Haynesville Shale Play, these offer letters containing pre-printed mineral deeds, a check and sometimes even a Power of Attorney giving legal authority to the solicitor were rampant.  Cobra Petroleum also used this form of unsolicited purchase offer.  It got so bad and enough people were taken in by the approach that myself and some Louisiana O&G lawyers working for mineral owners lobbied for and got a law passed to place these types of offers under a standard recession regulation that allowed a seller to rescind the sale up to three years (if memory serves) after the sale date.  This was a Louisiana law so this form of solicitation remains allowable in Texas regardless of how unethical and exploitative it is.  Seller beware.

Suggest you read through this archived discussion.



Southwest Petroleum Company, LP has been in the business of acquiring minerals and royalty for (now) many years.  As Skip alludes in his response and link to a prior thread, a preprinted mineral and/or royalty deed and a draft accompanies their mass-mailed offers.  Make no mistake - "several areas in [Insert State Here]" is their standard MO.  As one shaler put it, these are "flypaper" offers.  These parties (Southwest and Cobra, as referenced in the related thread) chase active and producing areas looking to put out unsolicited offers in the hopes of making money off of your interests.  Buy low, sell high (or hold and rake in dollars over time).

Skip points out that there are statutory protections afforded to LA-held interests which include publishing of "big box" advisories in those mineral and royalty offers, and ability to rescind mineral and royalty transfers on the behalf of the Grantor [sixty (60) days if the compliant "warning" is posted within the offer correspondence, up to three (3) years if not posted].  This does not help you in your case as your area of interest is San Augustine TX (from your other posts), and there are no similarly devised related statutes in TX.

You should also be aware that in LA, so called "omnibus descriptions" (e.g., "all that Grantor may own in San Augustine, Texas") are basically unenforceable in Louisiana - if no substantive attempt is made to describe the lands subject to the sale, one need only seek out knowledgeable counsel (such as, an attorney familiar with mineral law) and with a well-worded letter will generally elicit a "whoops, sorry" letter and an amended cash sale tightening up the description of the lands conveyed.  In Texas, there is no similar safe harbor.  If one executes a deed stating "all that Grantor may own in the County of San Augustine, State of Texas, whether properly described or not", the conveyance is likely to stick.  Thus, in one's own interest, it is advisable to describe the property to be conveyed (either by explicit description or by deed reference) and limit the transfer to that description.  Also, unlike LA, mineral and royalty transactions are FOREVER in Texas, unless otherwise stated, and are not subject to prescription due to nonuse.

I should disclose that I am not personally a big fan of rescission periods in transactions involving real property (minerals or surface) - as a landman, it gets in the way of clear title (a legitimate offer, made and accepted by knowledgeable parties, followed by the execution of a conveyance of acceptable form and translative of title, should stand on its own in the record and not be subject to some statutory delay in the clearing of title, in my view).  Unfortunately, too many bad apples have spoiled the bunch and "protection statutes" are now becoming more commonplace - I always find it amazing that people are suspicious of offers to buy and sell a vehicle through online, text or mail initiated solicitation, would likely NEVER sell a family farm by mail, but would be willing to entertain the sale of minerals and royalty on an "advance draft" and a teaser letter without even so much as making a phone call.  But, here we are...

As per usual disclaimer here on GHS, IANAL, or as a fellow landman likes to quote, "I am not a lawyer [from whence "IANAL" is derived], I am not your lawyer; nothing I say should be construed as legal advice".

    I get offers and have gotten offers for years and Yes from Southwest along with many others. They go straight to the shredder!!! And yes they   Include these bank draft checks. Also if you flip over the paperwork it has a disclosure that they will be acquiring ALL mineral rights you have in the county even if they are not listed. Again the SHREDDER is your FRIEND shred them! 

Gale - what if you need money for your childs college, or wedding, or medical expenses, or pay off bills, or any number of things are you going to continue to wait for that well to hit?

Then you sell to a reputable mineral buyer as opposed to Southwestern or Cobra.  I help mineral owners sell as one of my services.  This discussion isn't about whether someone should sell or not, it is about who not to sell to and what constitutes a proper (legal) purchase offer in the State of Louisiana.

I'm sure you don't do that service for free

Lee- first off I would never sell my mineral rights basically under any circumstances. I inherited my rights from my mother, who inherited them from her parents who inherited them from their parents. My feeling these are “ on loan” to me during my lifetime and will be inherited by my children. I also understand needing cash flow especially under SOME of the circumstances you mentioned. However, there is only one circumstances I would give value enough to even consider selling my mineral rights that you mentioned. College education can be paid for many ways and kids don’t have to do it “ their way” on your dollar. Scholarships, Jr Colleges, etc are viable ways to work towards getting a college degree. Paying off bills also is likely a short term fix unless you work hard to get out of debt most likely you will end up back in. Weddings again don’t have to be done “ their way” but based upon what you can afford plain and simple. Again there are many cost cutting ways to do a wedding ( and I’ve done weddings for years so trust me when I say you do not need to spend your life savings to have a nice wedding for your child) Medical expenses is the only thing you mentioned worth giving thought to selling any mineral rights. I happen to have a child who’s 31 and at 8yrs old was diagnosed with a fairly severe neurological disability. Believe me his medical expenses were significant. If I had not had the income from my mineral rights at that time there is no way We could have given our son the care he received. . And I thank god everyday I had the ability at that time to do just that. That being said looking back he never lacked for care of his Drs and we had insurance but it availed him access to care he would not have gotten. I was able to be with him when needed and we were able to seek additional Drs as well as pay for medicines the insurance would not cover that helped him. Let me assure you that medications did not just start being expensive because 20+ yrs ago many of these medicines my son was on cost $1500 a month or more. So the fallacy that medical care cost have risen in the past few yrs is simple not true. My point is we had huge cost associated with our sons care. Never once did I consider selling my mineral rights. 
   However if I was to consider selling I would seek someone who has knowledge about mineral rights way beyond what I know. My knowledge because my only knowledge of of Oil/ Gas is relative to my own mineral rights and that’s the amount my checks are monthly. I know nothing about what a geologist knows, or a geophysicist knows, or a oil and gas lawyer. Often life experiences in your professional field is where you learn a lot so people in the field know way more than I ever will know. I have talked to people about many things to do with mineral rights and I know there are formations such as The Travis Peak goes to 6400ft and then it’s the Cotten Valley which I believe is 1600ft ( can’t jog my brain right now) and another formation below Cotten Valley. I also know you can sell the mineral rights in these formations. So if I was really serious about selling I sure as heck wouldn’t sell in a formation that has any kind of production going on and produces income. Seek help just like selling a home it’s no different. Somethings need a profession help to protect yourself. 

Money is money it doesn't matter who you get it from if you are selling.

You still miss the point, lee.  What matters is getting a fair market offer based on specifics.  That is unlikely to happen with companies that employ the offer letter with a mineral deed approach.  Those companies are fishing for unsophisticated mineral owners.

Lots of good comments on this topic / company / practice - here are some points from my perspective.

I have ORRI on EF wells in Karnes Co (was Pioneer / now Ensign). Production from the three hz wells has dropped over the years to the point where my monthly checks are in the $200-$300 per month range (after being $10,000+ per month in the early days of production).

Purchasers like Southwest play on the mineral owners being willing to sell for a high multiple of the PRESENT monthly cash flow. Perhaps 36 to 48 months or more times present monthly revenue checks.

These companies are playing for the long haul - their staff is checking out these units to determine how many more wells can be drilled on any one unit. In my situation, there is room for 4-5 more new laterals (all to be completed with the most modern stimulation techniques). Plus there are 1-2 additional shallower horizontal targets that can be drilled.

  • All with the potential to yield very high (i.e. $10,000+ per month) types of checks.
  • The issue is WHEN will these wells be drilled since the operators don't have to drill new wells right now since the production unit and usually shallower rights are all held by production (HBP) by the existing initial wells.  

The key for ANY mineral owner is to know the situation with their specific situation. Digging into the public records will give you info on the present unit, number of wells and space for more wells. This leg work and research could save one from giving away their mineral rights for pennies of their true worth.

  • Many of you will say -  I don't know enough to be able to do that. Or you don't have the time to dig into these details.

If that is the cash, you may want to consider finding a good O&G consultant to do the research for you. The cost of that report would probably be well worth it.

Just my opinion as always.

Good points, RM.  Those who are interested in a sale should not be dissuaded or criticized for exploring a sale.  They should get professional help and try to get multiple offers. 

The business model of sending unsolicited offers which include a mineral deed and/or a power of attorney form is one used to take advantage of mineral owners and should be illegal in all states.  The Louisiana statute is a good model as it does not prohibit unsolicited offers by mail only those that contain a POW and/or a deed without the required disclaimer language regarding the recission period.


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