General Inquiry into Continued efforts to determine Valuation of O&G Mineral Interests

General Mineral Rights Discussion
1

Hello,

It has been some time since I posted on the Forum.

Using the County Groups (With Considerable indirect help from Clint Liles), rummaging through past posts, playing on the RRC Website, and making a few trips to County Courthouses, I have managed to put together a platform for acquiring and organizing my family's Interest Holdings on a County by County basis.

Beginning with Karnes County, I have located all interest Conveyances, assignments, and deeds for which Karnes County interests have been included (though I suspect there to be quite a few more out there in County Courthouse records that aren't online, and I can't drive to and back quickly enough (i.e. Zapata County).

That said, I now have a complete set of Assignments/Deeds into our family's possession, Affidavits of Heirship & Probates of Will to prove the people we purchased from had legal right to sell, Original Assignments/Deeds from the turn of the century that include complete size of interest and the specific coordinates of location. I have translated this information into Sec., Blk., and Survey; followed by pulling Drilling Permits which have been approved (that I can connect to leases and division orders I have received) and those which are pending (both on properties for which I own interest and some in properties surrounding those I own interest in where there is not currently any production), and Completion Reports for those locations that have already begun drilling (and in some places completed) wherein I own interest.

My questions.

For those areas that I have interest, but it was unrecorded prior to drilling having bee performed and now showing as complete; What would be the best way to go about recording these interests in such a way that I can get those funds which were due to be paid out to the people we purchased from (whom I have checked and are also showing no record of assignment in the county)?

If I were to chose to sell these interests, how much information is pertinent to the overall Value of the Holding?

For Example: I have located ~46 mineral acres worth of interest (our total aggregate interest of roughly 300,000+ mineral acres) in Karnes County, for which ~15 mineral acres of interests assignments are actually recorded; with around 10% - of the 15 min. acres - currently paying out in production (though I suspect more).

What would be the best way to approach selling these interests if I were to chose to do so?

Record everything in the county first, attempt to get released funds held in suspense, then sell based upon Projection of currently approved and pending approved production against an average for production in the area; or would I be able to get a close amount of money if I have all of the paperwork cataloged and calculated so that whoever purchases the interest only needs to verify my own research, then subtract a small fee for having to do the manual labor themselves?

As I move forward, and I become more knowledgeable of how to use the Resources on the web where documentation in available (CountyGovernmentRecords; RRC Website Maps and Query engines, etc.) and how to keep up with the science trends and market speculation concerning new findings, I will be expanding out from Karnes County into the other ~150-200 other Counties in Texas and the Surrounding States using the same collection organization and databasing format that I have developed for doing Karnes.

These last few questions are the most important to me, as after 20 years of these interests being almost completely un-managed, because I have invested a decent amount of my own savings, and even put my career on the sidelines under the pretenses that it will pay off.

Our monthly passive income has dwindled to almost nothing since my grandfather passed, but a partner of his from the 90's (that hasn't been in the game in almost as long) is still pulling in upward of 5-6 figures a year passive. Keep in mind, my grandfather trained him and everything he owns, we own a part of, and then some because my grandfather was in the business 30 years before he taking him under his wing.

Of course he has been managing his resources properly where ours have not been; paying attention to what needs to be recorded where, and who to contact once that's done to get the ball rolling for payout; how to negotiate a Lease for his best interest, etc. I count myself lucky to have found him after searching an entire year, but there is only so much I can ask him to do yo help without feeling as though I am taking advantage.

Any help in this, the last wing of my endeavor (for this county at least) would be greatly appreciated.

As a note, I have spoken with a few purchasers from Acquisition Firms, and begun the preliminary stages of navigating how I am going to be able to build these relationships; but all in all I AM NOT exactly looking to Sell Anything at the moment. I am trying to find out how to establish Proper or Fair Valuation of my Assets. So if you happen to work in Acquisitions, unless you would be willing to divulge "best practices" information, signs and signposts to be aware and wary of, please restrain from asking me to PM you. I am hoping that someone who either has pre-established experience or recently developed experience to help me to figure this out.

Thank you

Mathew

2

Hi, Mathew -

Wow, that was a lot to wade through! But it sounds like you have a pretty good bead on things so far. And it is always best to have a method for organizing your information.

First, www.countyrecords.com has the Karnes County, Texas County Clerk's Records available online back to Sovereignty and a reasonable cost. You will still need to travel to Karnes County to review the County and District Court Records, but at least you can review the Real Property Records online.

It would stand to reason that if your Grandfather had such a large estate, someone has a set of his files somewhere. Have you spoken to family members? The Attorney(s) that handled his affairs / estate? Was there a Trust Department somewhere managing his properties?

I hope no one was foolish enough to destroy them!

If my experiences hold true, I would imagine that the gentleman that your Grandfather took under wing would be very happy to provide you with what information he has regarding the subject properties or access to his Land and Production / Royalty Files for your own review. After all, he wouldn't have what he has without having had your Grandfather's faith and help. Does he have an Attorney or a Landman helping manage his properties?

As far as your (family's) royalties having dwindled over the years and his having not done so, I would advise you request a set of his monthly royalty check stubs (or account listings). Contact the Royalty Division Order Departments of those companies and ask if they have any funds in your Grandfather's name (or any subsequent names down to the present day) being Held In Suspense.

And you might want to be prompt about that, because most States require that the monies be turned over to the State after a certain number of years (Escheat to the State). You won't lose the mineral or royalty interests themselves, but you might lose the monies left in suspense for too long.

Other than that, I advise you research the Unclaimed Properties Sites at the Attorney General's or similar office for each State you suspect your Grandfather had properties in and, again, under the various possible names down to the present. If you find anything listed, the website has instructions as to how to proceed from there.

Another thing to consider is as you discover and clear title to your properties and companies begin to contact you about leasing your interests, always include a provision in your lease requiring that they provide you with any Title Runsheets and Title Opinions regarding your properties. As you are learning, researching the public records and preparing reports on mineral and royalty properties can be time consuming and expensive. This would be for free and prepared by industry professionals.

As to fair valuation of your properties, there are differing industry standards. Properties presently producing are more readily evaluated, of course. And always, location, location, location, effects everything.

My first and last advice to any Mineral Owner is to never sell anything, although personal circumstances sometimes make it a necessity.

I do not work in acquisitions, although I have from time to time been successful in helping people by introducing them to potential Buyers and Lessee's (only upon request) and occasionally assisting them in their negotiations.

If you would like to discuss your circumstances and issues more privately, request that I become a friend on The Forum.

Hope this helps -

Charles

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

3

Hello Charles,

Thank you for the feedback, and as always it is greatly helpful. Matter of fact we are already friends on the forum, and you helped me quite a bit with trying to get the people who stole our records to give them, or copies of them, back.You recommended that I attempt to contact them, the litigating attorney for the review, and Wade Caldwell. Which I did.

Unfortunately, even though they are under Review for Fraudulent Behavior, since the interaction is past statute of limitation, the woman in charge of the royalty acquisition firm has been reticent to even speak with me and the one time I did, she was very curt and made no gesture to respond in the affirmative to my plaintive requests to work with them For Both Of Our Benefits. She must really be pissed that my mother didn't let them fleece us to the tune of 1/20th (and if you believe my Grandfather's ex-partner 1/100th) of the actual value of our estate. :)

It's been more than a few months since our last correspondence, and I have made a great many strides in my efforts. I have not only completed a database of online records which can be obtained "free of charge" from a variety of sources (and there are TONS!!!! of sources of information; almost everything which you can get from one company's software platform at a hefty $, can be found free pooled together from multiple sites) - along with Lease, Operation, Production Pay-out, etc. - but I have programed a complete Data Entry System for my Database that will (hopefully ;) ) soon be able to accept and sort information that I highlight and transfer from a website directly to the database.

This was really the first stage though; the rebuilding of the Records, and it is probably 60% complete based upon that being a rough estimation of how much materials are available online in the areas my grandfather worked over certain periods of time.

To that effect, yes I will be spending a fair amount of time in Courthouses, and have already acquainted myself with the County Clerk's office in Karnes County.

I am being "Courting" with my grandfather's partner because it seems they had a bit of a repertoire that formed the basis of their transactions, and I have had to pick it up paying close attention to social queuing, body language, slang, and monitoring my own habitual response reactions. They were as is said "good old boys" whose similar wit and attentive evaluation of peoples behavior made them formidable and effective. I will be getting to the point where he will probably allow me to have access to the things you referenced (and I have been aimed towards the attainment of myself) with time, and I believe the patience is a part of the process. I get the feeling that my grandfather put him through a similar "evaluation" before taking him on.

You are right about needing to get on top of contacting the RDO Dept's for Operators in the areas where I have interests, and have spent the last few weeks printing documents, and drafting both letter's for the Operators and what will be Notarized copies for my files, along with Affidavits to Certify with the county verifying the location of the "Official" documentation. I'm hoping to save money on Recording every sheet of every assignment, affidavit, and probate in every County and Karnes is going to be my experimental site.

Any advice concerning whether this is a legitimate way of approaching the issue?

It seems it would save me $100's of dollars and some of the Affidavits and Probates are quite long (15-50 pages sometimes).

As for selling, Normally I WOULD NEVER CONSIDER doing so, but if I want to make a go of turning this into a functioning source of income again, I will need Capital that exceeds what I've saved working IT. Like you said location, location, location!!! Karnes seems to be the location for a few reasons:

1. It represents a low-moderate size of interest holdings overall compared to other counties my grandfather worked. When he was doing business, no one thought twice about Karnes County, and he himself never once recorded there (never any reason to); which I guess is why so many people were willing to give up a portion of their interest in the county.

2. After studying the Geological Formation at the heart of the Formation of Layered Shale Deposits along the Eagleford Formation, along with the more recent discoveries in the area of Geological Formations at lower depths and greater pressures, it seems that soon there will be enough evidence to verify in what areas of the Eagleford Shale deeper drilling will tap into a larger deeper Layered Shale Deposit.

That said, I'm not quite to the point where I'm confident in my ability to sell, but I'm contacting a few people to explore different methods of evaluation, to tease out what kind of negotiating is and isn't responded to - and if possible why - and to get an idea for how I will gather materials for a Presentation Format when I do decide to sell. As far as I am concerned, my interests are an Asset and it is up to me to define the parameters for which the Valuation is determined. That said I hardly expect a 1-1 payout (as a friend on here noted in a recent correspondence), but also realize that determining 1-1 ratio is highly speculative to begin with and could play out to my advantage.

Thus securing a reasonable Capital to turn my attention to the Counties where my Grandfather did the greatest amounts of Acquisition and the Counties where the records do not extend back to when he was doing business in the area.

In the next 2-3 weeks I may take you up on your assistance on connecting to Buyers and the negotiation process, and I will contact you Via Mineral Rights Forum Mailbox, if that is OK.

Thank you again Charles. Your input is always refreshing and informative.

Mathew

4

My apologies for not remembering our being friends on the forum already. I just checked and I have 93, most of them people like you that I have responded to over time.

I still don't understand why you have to reconstruct your Grandfather's records. Didn't he keep any?

Look forward to hearing from you again -

Charles

5

Lol, No worries, seriously :)

I have only interacted with a few individuals on the forum, and your considerable help made it easy to remember you. I've also not been on the forum as long as you.

As for the records - to be brief - in 2008 my mother signed a contract providing 50% of our interest in almost every County we owned interest in for a paltry sum compared to their inherent value, one of the stipulations of the contract being that they would take our records (those my grandmother didn't burn), and digitize them providing us with copies of documentation and the data-based information.

They paid the money, took the records, then about six months later - no word concerning the records - they came at her aggressively with an offer to buy the rest of our interests for little more than between 1/20th and 1/100th of what they were worth (depending on who you ask; my calculations put it at around 1/20th of what they were worth, my grandfather's ex-partner claims it is closer to 1/100th). My mother refused to sign, and they summarily cut off contact with us.

I was in school at University, and not fully aware of what was going on at the time. Now they didn't fulfill the terms of the contract, and have never recorded a single interest (even though they went to the trouble to record the 50% conveyance in every county in every state we sold the interests to), which was also a part of the terms of the sell. I later found out from my Grandfather's partner that the records my grandmother kept after he passed away were all of the Binders that cataloged in some old school short hand format, all of our holdings; he said he probably wouldn't even know how to decipher them, let alone the firm who stole them. Hence the reason they have never recorded anything; they probably have no idea what we have where recorded and not recorded.

It turns out this Would have been grounds for fraud, and could have been contested in court, but more than three years passed before I became concerned and involved myself with trying to talk to lawyers or at least make contact with them under the aegis of doing us both a favor. The owner's response was "Cold" to say the least.

I decided my time would be better spent utilizing the resources that weren't available when my Grandfather and Grandmother were working in the industry, to try to rebuild from the ground up.

It is what it is. I was frustrated, and then confused and worried... but now I am resolved and confident in my capacity to make the most of what is left. :)

Mathew

6

I'd love to see a list of the States and Counties involved. Maybe your Grandfather and Grandmother's names. Maybe I can think of some way to help.

Oh, and while I am not an Attorney, I have never been aware of any Statute of Limitations on Fraud.

What was the Buyer's Name and, if their name has changed, who are they now?