I own a small royalty in Reagan and Upton counties. I am not looking to sell, but I get at least one unsolicited offer a month. These have varied in dollar amounts, but for the most part they have been reasonable. Last month, however, I got an eye-popping seven figure offer from Black Mountain Royalty! I doubted its veracity, but felt it was worth checking into. The company seems legit, and they ARE buying in that area. So I called the number and was told I would be contacted by letter.
When I got the letter, it said that the original offer was a “software error” and that the offer was not valid. They would re-figure the offer if I was interested.
Is this the way they do business, or do I believe it truly was an error? Anyone with similar experience? My four brothers also got the same “offer.”
Mr. Dierschke, it probably is the way they do business. There are other recent threads on the subject in these forums. I think it is a form of bait and switch, they get you into negotiations to sell something you weren't interested in selling in the first place, that you wouldn't have sought them out to solicit an offer for, and then they see if you have any idea of what it is worth, to see if they can make money off you.
Mr. Dierschke, it probably is the way they do business. There are other recent threads on the subject in these forums. I think it is a form of bait and switch, they get you into negotiations to sell something you weren't interested in selling in the first place, that you wouldn't have sought them out to solicit an offer for, and then they see if you have any idea of what it is worth, to see if they can make money off you.
That was the only angle I could see. I won’t have any further contact with them.
I have sold producing royalties to Black Mountain Royalty 2 years ago so I can confirm that they are a real company - in fact Im sure they would love to take back the money they paid me since they will never get payback on that investment. As for the "software error," I have received offers from companies this year that I felt were excessively high, and have generally found that when I call the company to verify the offer and express my interest, they typically acknowledge that they cannot honor the offer (or just not return my call at all). My guesses for why this happens are that a) some offers were drawn up several months ago before prices sank and now the companies are nervous about honoring their offers, or b) in some cases, the individuals within these companies that are drawing up the offers are just complete morons who don't know how to propertly value royalties, or c) in some cases the companies are intentionally sending high offers in order to generate leads at which point they retract the offer and make a lower offer, or d) some combination of the above. In any case, I would simply advise to not get too worked up about getting an offer that doesn't pan out. It certainly doesn't hurt to follow up on any offer that you get, but most likely if the offer seems too good to be true, then it probably is. The offeree most likely states in their offer letter that they can terminate the offer at any point without warning, so they are protected against being accused of making a binding offer.
SOP for royalty buying companies. They buy the mineral rolls from the county, send out letters and see what comes back. They always look for a check stub. The deed always says all your land in a county.
When you do a mass mailout like that one, mistakes do happen. All it takes is for the mailing company to make 1 tiny mistake in their spreadsheet and every single offer amount will be incorrect. One too many zeros, put the decimal in the wrong place, etc. Not everyone out there is in the business of bait and switch.
I can understand that. But in this case we are talking about a 100X what most of the offers I’ve received were. It also seems that on a mistake of that magnitude, especially if it were a software error, that every offer they sent out in that time period would be wrong. That would seem to justify a follow-up mailing to those who received the initial letter. At the least they should’ve pulled some sample offer letters and run them against the “correct” offer amounts. That would be a minimum of due diligence to perform saving everyone, themselves included, a lot of effort.
Again, I’m not saying the company did anything illegal or even unethical. I will take their word that it was a mistake and leave it at that.
You are correct, if it was a software error, then the entire mailout would be incorrect. But you mentioned 100X the regular offer and that your 4 brothers got the same amount. That's what makes me think it was an error. I agree with you about resending a letter clearifying the mistake, but that would cost several thousand dollars to do. I wasnt harping on you personally Mr. Dierschke, i just think its funny that 'most' people on this site are very quick to judge, especially when it comes to O&G companies and/or Mineral/Royalty companies. BUT, i dont work for Black Mountain, so i truly dont know what their intention was. So who knows.
I used to make my living supervising mass mailings. So I know how easily a mistake can pass through many hands before going out for the world to see. So believe me I know about those expensive correction letters.
I got an offer from Black Mountain for my miniscule interest in the same Area (Upton Co., TX) dated July 13, 2012. It was more than most of the other offers I've received, so I've got to give them that. Most of these companies just copy the exact taxable value of the interest from the tax rolls and make that their offer. These guys at least put a minute of thought into an offer.
I'd guess it was, indeed, a software error and not a bait and switch maneuver.
I had an O&G company tell me that it wasn't their fault that the company that they hired sent my check out without postage. If I hire someone to do something for me, I am responsible for their action.The mailing company didn't owe me the money, the oil company does. Typical avoidance of responsibility for a 6 year old, I expect better from a company that has a financial responsibility to me. I did get the letter and check eventually much battered and 3 weeks late. Kudos to the postal system that even though they stamped it as needing postage, delivered it anyway, although late. It was metered postage on all letters before and after, not just a case of a stamp coming off. Don't get me wrong, I didn't contact them angry, there was a problem that needed to be fixed and I only got perturbed after hearing the it's not our fault garbage. Whose fault would it be, if not the ones supposed to be sending me the check? Is it my fault they didn't hire someone better to do that job for them ? who is at fault ?
J said:
You are correct, if it was a software error, then the entire mailout would be incorrect. But you mentioned 100X the regular offer and that your 4 brothers got the same amount. That's what makes me think it was an error. I agree with you about resending a letter clearifying the mistake, but that would cost several thousand dollars to do. I wasnt harping on you personally Mr. Dierschke, i just think its funny that 'most' people on this site are very quick to judge, especially when it comes to O&G companies and/or Mineral/Royalty companies. BUT, i dont work for Black Mountain, so i truly dont know what their intention was. So who knows.
RW - Im confused as to what your point is. According to Mr. Dierschke, the company in mention admitted there was an error. I didnt see anything saying that the company passed the blame onto anyone else. Are you saying that they should honor the incorrect offer amount? If this truly was a mistake and not a bait and switch tactic, mistakes do happen. Even from you most loyal, trustworthy, and most competent employees.
I was replying to your "most people on this site are quick to judge O&G companies and /or mineral/royalty companies" which is a broad statement and I think opened up the field beyond Mr. Dierschke' question , I was giving an example of an o&g company, SM Energy to be exact. I wasn't quick to judge especially when it comes to o&g companies, but possibly It would be accurate to say I am now. There is a reason I do not trust and that is because I know them.
J said:
RW - Im confused as to what your point is. According to Mr. Dierschke, the company in mention admitted there was an error. I didnt see anything saying that the company passed the blame onto anyone else. Are you saying that they should honor the incorrect offer amount? If this truly was a mistake and not a bait and switch tactic, mistakes do happen. Even from you most loyal, trustworthy, and most competent employees.
RW - If you know from experience with this company that they intentionally do things like this, it might be better to share those experiences rather than just make a statement like " it probably is the way they do business". Like i said earlier, i dont work from them and don't have any history with them, so they very well could be doing things like that. But if someone on this forum has a history with them, well isnt that the reason for this forum? To talk about things like that?
J, point well taken. If Mr. Dierschke had mentioned 100X in his first post, I would have assumed a gross mistake, instead of going the other way and assuming it was bait. I made a judgement call based on too little information, in that I apologize to any harmed in this case. Not to say that it doesn't happen and that this company may or may not use such a tactic. I had heard of this company recently sending out offeres of 2X value, what the owner thought to be fair value for their producing minerals, which means they should have some idea. Which does sound like bait. I also believe that if a company frequently sends out offers that they can't honor, they would either strive to fix the problem, or it's doing something they like.
J said:
RW - If you know from experience with this company that they intentionally do things like this, it might be better to share those experiences rather than just make a statement like " it probably is the way they do business". Like i said earlier, i dont work from them and don't have any history with them, so they very well could be doing things like that. But if someone on this forum has a history with them, well isnt that the reason for this forum? To talk about things like that?