Advice Regarding Offer

[lfto]

Hello, my mom and her siblings have a small amount of mineral rights they inherited decades ago. She’d sporadically get checks, and random really low offers, but they have recently received what appears to be a more serious offer. My mom lives on disability to she’s anxious to sign on the dotted line, but because she lives on disability, I absolutely need to make sure I help her make a wise choice.

I know nothing about any of this stuff, but have collected quite a bit of info after spending plenty of time on this awesome forum. That said, I don’t really know how to make sense of that info regarding the offer presented to her. Here is what I have…

Per Howard CAD Site: Property ID: N000111590 Legal Description: Blk A, Tract 48, Abst 592, GORMAN 48 #1, BIRCH OPERATIONS, INC., SPRABERRY (TREND AREA), B & C Geographic ID: G2688.0071445.RI Type: Mineral % Ownership: 0.143% Market Value $170

I believe it is this: http://gis.rrc.texas.gov/GISViewer/index.html?api=22736857

From RRC Public GIS Viewer API No: 22736857 Desc: Oil Well Well No: 1 Total Depth: 10358 Operator: Birch Operations, Inc Field: Spraberry (Trend Area) District/Lease No: 08 / 43806 Lease Name: Gorman 48 On Schedule: Yes

This info also pops up when I mouse over: Commodity: Crude Oil Operator: Nustar Permian Trans and STG, LLC

One thing that caught my eye is it appears there are about 14 permitted locations just a stone’s throw from her location. Not sure if that means anything whatsoever, but maybe it does. Naturally I want to know why there is this offer, now, assuming there has to be some particular motivation.

Offer: Lindley Energy - Purchase ALL of your oil and gas royalty & minerals in the captioned property

Captioned Property: E/65 acres SE/4 Section 48, Blk. A, B&C Survey

Royalty Interest: 0.001429

Well/Unit Reference: GORMAN 48

Offer: $8545.42

Any thoughts? Thank you all so much!

[Gary_Plunkett]

Don’t sell. Contact Birch and request a Division Order.

[fjonesiv]

a. Howard county is one of the top counties in America for hydrocarbon mineral value

b. there exists a robust industry in America, home of the free, land of the brave - that of attempting to buy mineral interests near current oil and gas drilling activity. It’s a game built (like many other business games) on buyers using knowledge/expertise that potential sellers generally do not have

c. if you really need ready cash, the best thing to do is hire a qualified person/company who is working directly and only for you (and is willing to state such in writing), and have them analyze your specific interest with respect to it’s approximate value. At the very minimum, you will have professional ammo from which to negotiate.

[TennisDaze]

Effective April 2, 2019, Birch assigned its interest in leases in Section 48, Block A to Diamondback Operating - Doc# 2019-00006486 in Howard County records. Birch retained operations of the vertical wells. Diamondback operates wells in Section 50, adjacent to Section 48. So Diamondback will permit horizontal wells across these sections. Diamondback may not be in a rush as the leases are HBP by the existing wells. On the other hand, someone may have information that Diamondback is preparing permits. Or Lindley may be representing Diamondback.

[PermianResearch]

Good morning, you’re receiving offers because of the nearby activity and the hopes that additional wells will be drilled on the property sooner rather than later. Based on the interest you provided, your ownership is pretty small. I would ask them to put their offer in terms of price per net royalty acre, rather than a flat offer.

Do you know what the lease royalty is that your mother’s interest is subject to? This also factors into the value. In theory, the time when your minerals are most valuable is when the permits on your property, so you may be better off waiting until that happens before making your decision.

[Ribeye-Rare]

To add to what has already been suggested, I’d point out that in many cases these offers are conditioned on your owning 100% of the minerals in the entire tract, which in this case appears to be 65 acres.

Given that your mother’s royalty interest seems to be relatively small (many factors here - royalty, unit size, percentage ownership in tract), you may find that what they are willing to pay for her interest is less than the $8.5k stated.

I say this even though they appear to have her ownership information. They don’t always do detailed homework until a prospect shows an interest, as many of these offers are sent out.

In any case, good luck. It never hurts to call them and spend a few minutes talking.

[sunny]

I purchased a book titled Primer on the Texas Law of Oil and Gas (fifth edition) It is written by two attorneys but is easy to understand and filled with basic information that will put you well inside the ballpark as you read it. It is available from Amazon.

[William_E_Gee]

Do not sell this interest. If you must, you buy it. Keep it in the family. You can also sell the shallow rights and associated SA production and keep your deeper mineral rights. Typically the offer in the mail is 10% or less of its short term value.