I have recently received a very attractive offer from Pleasant Grove to purchase my interested in the Merchant Tr 29 Unit in Reagan Co. Last year, I received a similar offer but a bit lower than this one. They state if I have received other comparable offers, please contact them because they stand ready to compete and would like the opportunity to do so. Can anyone tell me what they know about this company. I would also like any feedback regarding how valuable this Merchant TR 29 Unit actually is. I am aware it has been producing for well over 60 yrs, but why, all of a sudden this very attractive offer. Tell me if you know what is going on there. Perhaps this is also just fishing. I would like some feedback.
Eva,
This may sound surprising, but the offer that Pleasant Grove sent you is probably quite low compared to what the minerals are actually worth. Your interest appears to be in Pioneer's Merchant Unit, and that is in the heart of one of the best onshore oil and gas plays in the United States. Despite the production that has occurred for many decades, new horizontal drilling and fracturing techniques are producing tremendous amounts of oil out of these old fields in the Midland Basin, and your property is in an area that will undoubtedly see future horizontal development. Not to mention Pioneer is a great operator.
By posting on this forum, you will likely be bombarded with friend requests and private messages from mineral buyers that lurk the forum trying to buy minerals. If you are wanting to sell the minerals, my advice would be to work with a group that is familiar with what minerals sell for you in your area, and that can market it to prospective purchasers. I note there are some sponsors of this forum that appear to do that type of work. http://marketplace.mineralrightsforum.com/ad-category/minerals-management-consultants/
Best of luck!
I suppose I should tell them my minimum is about 5 to 10 times their offer and see if they are still interested. Thank you for your information. I will check the website you provided!.
EnergyNet is an inappropriate tool for one-time fee owner sellers, especially if they are not institutional owners or those familiar with the business. A mineral owner not familiar with their holdings would have a difficult time establishing a reserve price and properly developing a prospectus. Further, the seller's agreement with EN is 19 pages, and here is the commission they charge:
Between $1 and $100,000 10.0%
$200,000 9.50%
$300,000 8.75%
$400,000 8.25%
$500,000 7.75%
$600,000 7.25%
$700,000 6.75%
$800,000 6.25%
$900,000 5.75%
$1,000,000 5.25%
Depending on the sophistication of a broker, they can provide services above what EnergyNet can, such as a reviewing the chain of title to confirm what the mineral owner possesses, provide deed form advice, and create a dialogue with the buyers instead of an ebay style auction. As for 18,500 registered bidders, if a broker is worth their weight they know the top buyers in a county, and they base their compensation on a commission. Not to mention a lot of those EN auctions end with the reserve not met. EnergyNet's bread and butter is massive working interest packages. In fact, I recommended EN to someone in the post below looking for that type of deal. In the case at hand though, an inappropriate tool.
I agree with you Mineral Joe, she does deserve to get the best auction price and any minerals management people should provide assistance to list the property for a reasonable one-time fee. In addition to Energynet, Oil and Gas Asset Clearinghouse is comparable. The minerals manager (landmen/attorney) should be qualified to advise on the auction and there is no substitute for live auction selling. It's a market driven asset and no way to know if private deals are going to reflect an accurate market price otherwise.
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Eva, I will check the activity going on in the area and let you know. Be mindful of the economics and have a non biased party channel your offers. This structure maintains the integrity of each role and compromises any biased predispositions. If you would like a channel of private equity offers, I will connect you with the capital group who brought me very handsome offers. Email me anytime!
Wolfcamp Shale nailed it. I gave one of my contacts a call and they provided a channel of handsome offers one at a time. This is what I want to extend to Eva as I just sold a producing mineral property for $10,750 per net mineral acre in Reeves County last week.
Any information you can provide that you deem as helpful would be greatly appreciated.
Why is Mineral Joe allowed to promote auctions and others are kicked off for trying to help? I am confused on who is allowed to give their slanted opinion and who is not. I will probably be kicked off as well. I have used auctions and had a horrible experience. Just a respectful question.
Not sure why someone got kicked off either beyond the fact that it might have crossed the line between public and private. The private deals are easy to find with a simple google search so they shouldn't be kicked off. Maybe it could have been worded better.
What happened to make your auction experience go so poorly?
I am sorry to have offended you Mineral Joe. It seems you took a pretty hard stance to the auction route. I just wondered why Texas Oil was booted for in my opinion was not as hard of an opinion as yours. My auction experience tied up my acreage for too long, was a hassle and lots of hoops to get closed. I felt I have had more control of the over all transaction and was able to maneuver easier when there were questions regarding the history of my acreage. Sometimes an auction might be the way to go and I think dealing with a trusted one on one professional can be advantageous. Just my two cents. Probably what it is worth. Everybody have a great day :)
Giving away potentially 10% of my revenue would make my auction experience a poor one, not to mention an unwise investment. An auction is not necessarily the best model. For those unwilling to roll up their sleeves, do some due diligence, and determine not only the value of their asset but what they would take for their asset, then, yes, an auction may be the best resource. Otherwise, get out there, invest the time necessary, educate yourself, and broker your own minerals. It's not difficult finding buyers in hot areas. Pretty simple, in fact, and you have the benefit of forums like this to give you options.
Eva,
The post by Chris Smith is right on. What those minerals are worth today could be a fraction of what they will be worth six months or a year from now. I would start by reading everything under the "Mineral Help" category on this forum. Attractive offers mean nothing if the party making the offer is planning to snooker you on the lease terms or doesn't really intend to deliver the money. It happens all the time. Be careful and don't sign anything until a qualified oil and gas attorney or a professional manager (not a landman) has read the contract. Also, don't cash any unsolicited checks that come in the mail and don't tell the landmen that there is a price you might accept without them making an offer first.
Best of luck to you!