Need some help for my 93 year old Aunt

General Mineral Rights Discussion
1

Hello all,

My Aunt has asked me to help her regarding a company, Clear Fork Royalty, that wants to buy her mineral rights. I found your group on a Google search and joined hoping someone could help me help her. She has the Mineral Deed and it's described as

"S/30' of Lot 2, Block 2, Bettie Simpson Addition to The City of Monahans, Ward County Texas".

I called them and they indicated my Aunt owned a .00005% interest. I'm a Financial Planner and don't know anything about mineral rights but I do know that's a REALLY small number and a drilling company would have to hit the mother lode for her to get anything appreciable.

They have offered her $125 for the rights. I just want to do what's right for my Aunt. I'd sincerely appreciate any help.

Thanks in advance.

4

Can either of you be more specific? .00005% just doesn't seem significant. Even if they were paying $1,000,000 a day in royalties her share would be $50. In a year that's $18,250 which I'm not making light of. My point is what are the odds of a firm paying $365,000,000 in royalties in one year? I'm trying to research this site to try to find out if there are active wells on the lot or there are plans for any. At this point I'm inclined to tell her just to sell and be done with it.

5

Significant? the first two posts are spot on, never sell your rights, generations down the road may actually appreciate that. Right now, yes it is small, but like you said "to tell her just to sell and be done with it" yes you will be done with it, forever. One never knows what future potential in these times now and projected will develop. just my two cents Brian...

6

.00005 interest in a unit that produces $18million oil is $900. Ten wells on a big unit could produce $100mil.
They know something, and are offering to buy your ‘dollars’ for a dime apiece (or less)!!! And you’re a financial planner?

7

Oldoak, I can do math. Why is it that because I'm a financial planner you assume I should have expertise in how much a given well could produce or how many wells could be drilled on a give piece of land? Unless you know something about my Aunt's specific lease that I don't then I'm not sure how you can conclude they are buying my "dollars for a dime apiece(or less)".

I know absolutely nothing about the oil and drilling business hence my attempt to reach out to others that might have experience or expertise in this area. On the other hand, I'm a damn good Certified Financial Planner and have been in the business for over 20 years. If you need help with what to do with your royalty money then I'm your man. However that was not the intent of my original post. I'm just looking for help and not be attacked.

8

I’m sorry you feel like you were being attacked. You asked for help and everyone’s advise was right on target…don’t sell mineral rights. Thirty five years ago my parents were talked into buying 1/4 of 550 acres of minerals only for $10,000 which I thought was ridiculous, but guess what, today there are 10 wells being drilled on it over the Eagle Ford??? And the plan is in a few years to go back in there and drill the Pearsall. I rest my case… Don’t sell minerals…no matter how small…

9

Thanks J. Michal. I'm just trying to put all this into perspective. For example, your parents own a 25% interest in 550 acres. My Aunt owns .00005% interest of what appears to be a very small part of a small lot. From my layman's perspective there's a huge difference between the two. Congratulations to your parents by the way. I'll advise my Aunt not to not sell and try to do some more research for her. I see there is an entire forum dedicated to Ward County. Thanks to all for taking the time to respond.

10

Animal Talk: Never look a gift horse in the mouth means never be ungrateful when given a gift.

Gift: a thing given willingly to someone without payment

Minerals: never sell 'em

Chill out and Good luck,

Pat

11

Thanks Pat.

12

The first two posters are not spot on. Anyone who says never sell is foolish. There are many reasons that a person might sell their minerals.

No one on this board knows your aunts financial situation. While $125.00 may not seem like much maybe it could help. With an intrest as small as hers, the first question I would ask how is she going to leave it when she passes on? Does she own other property that some one will get? Is this the only thing she has, which would not be worth the money to probate a Will over.

If she has children let one of them buy it for the $125.00.

But to say never sell, it just plain stupid.

13

Charles, thanks for the reply. My aunt doesn't need this money at all and finds the continuous letters she's receiving more of a bother than anything. She'd just soon sell the rights to put it all behind her. I told her she needs to know more before making a decision and that I'd do some homework for her. Obviously the easiest answer is just to say no to Clear Fork and ask them not to contact her in the future but that might stop other similar companies from contacting her.

My uncle as well as her only son are deceased. I'm the executor of her will and will inherit this from her. To be honest, I'm not sure I want it and it's a lot easier to take care of this now rather than through probate. To my knowledge she doesn't own the property but I will ask. When she first informed me of this my initial thought was "Ok, the Clear Fork people must know something she doesn't otherwise why would they want to buy the rights. Then when I learned she only owned .00005% interest I wondered how much potential could this be for either her or them. It seemed unbelievably minimal so my perspective was just sell and get it over with. I guess I need to think this over more.

14

If it would make her feel good, donate it to a charity and let it be their worry. Who knows maybe some good would come out of it that way.

WILLIAM A MOTLEY said:

Charles, thanks for the reply. My aunt doesn't need this money at all and finds the continuous letters she's receiving more of a bother than anything. She'd just soon sell the rights to put it all behind her. I told her she needs to know more before making a decision and that I'd do some homework for her. Obviously the easiest answer is just to say no to Clear Fork and ask them not to contact her in the future but that might stop other similar companies from contacting her.

My uncle as well as her only son are deceased. I'm the executor of her will and will inherit this from her. To be honest, I'm not sure I want it and it's a lot easier to take care of this now rather than through probate. To my knowledge she doesn't own the property but I will ask. When she first informed me of this my initial thought was "Ok, the Clear Fork people must know something she doesn't otherwise why would they want to buy the rights. Then when I learned she only owned .00005% interest I wondered how much potential could this be for either her or them. It seemed unbelievably minimal so my perspective was just sell and get it over with. I guess I need to think this over more.

15

I really must say coming from a LANDMAN it really would be stupid to agree to never sell minerals..... Hmmmm just my two cents Brian...

Charles Cunningham said:

The first two posters are not spot on. Anyone who says never sell is foolish. There are many reasons that a person might sell their minerals.

No one on this board knows your aunts financial situation. While $125.00 may not seem like much maybe it could help. With an intrest as small as hers, the first question I would ask how is she going to leave it when she passes on? Does she own other property that some one will get? Is this the only thing she has, which would not be worth the money to probate a Will over.

If she has children let one of them buy it for the $125.00.

But to say never sell, it just plain stupid.

16

To never say never, is stupid. No matter what one does.

B Volney said:

I really must say coming from a LANDMAN it really would be stupid to agree to never sell minerals..... Hmmmm just my two cents Brian...

Charles Cunningham said:

The first two posters are not spot on. Anyone who says never sell is foolish. There are many reasons that a person might sell their minerals.

No one on this board knows your aunts financial situation. While $125.00 may not seem like much maybe it could help. With an intrest as small as hers, the first question I would ask how is she going to leave it when she passes on? Does she own other property that some one will get? Is this the only thing she has, which would not be worth the money to probate a Will over.

If she has children let one of them buy it for the $125.00.

But to say never sell, it just plain stupid.

17

Mr. Motley, it does sound like your aunt's property is small. However, the .000005% interest doesn't sound all that reasonable. You say she has the deed with the description. It would be interesting to see how her interest in this small lot could be that small. Is there a way you could check into having the title traced back and see how she acquired it, and just what she acquired? I am familiar with things "back east" and have seen descriptions of less than one hundredth interest in fairly small acreage (if great grandpa owned some farmland, sold the surface and retained the minerals, no wells on the place so he forgot about it. Had many children each of whom had many children etc) but the number you wrote is quite too small to have had time to get that way due to inheritance. I would check further and not take the company's word for it.

18

William -

It strikes me as unusual that a Royalty Company is willing to pay $125 for 0.00005 interest in what appears to be the south 30 feet of a residential Lot in a small West Texas Town.

I don't have a map of the Bettie Simpson Addition, but my lot here in Fort Worth is about 70' wide (I just walked it like my Father would have, taking long steps to approximate a yard each. Haven't thought of that memory in years...).

If your Aunt's tract were 30' x 70', that would be 2100 sq ft, 0.0482 acre or 0.05 acre rounded.

$125 for 0.05 or 1/20th of an acre of minerals equals an offer of $2500 per acre for your Aunt's minerals. I am familiar with the area and can tell you that you can negotiate for a much higher price for your interests. Perhaps double or even triple their present offer.

Do you have a Street Address for the South 30 feet of Lot 2, Block 2, Bettie Simpson Addition to the City of Monahans? Or can you tell me who's name the surface belong to? Who is paying the Taxes?

The reason I ask is that I can see where there have been quite a few wells drilled in and around the town over the years. If I can locate the lot more exactly, I can send you what I can discover on the area.

If the current excitement about the Horizontal Drilling phenomenon is not what they're so excited about, then it may be that company is planning some sort of Secondary Recovery Project.

Hope this helps -

Charles

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

19

William -

One other thing I would like to mention. If your Aunt is using Medicare, her receiving a lump sum of money may make her no longer eligible for coverage.

When the money runs out and she reapplies for Medicare, she may be denied coverage because her's would at that time be pre-existing conditions.

Just a word of caution. I've seen it happen before, leading to tragic circumstances.

Charles

20

Thanks Charles. Good point.

21

Charles,

Sorry, read your second post before the first. Lots of great information. My next step was to contact the Ward County courthouse and start doing research on exactly where this property is, who owns it etc. Much of what you listed in your response.

Thank you for taking the time to give so much insight…as well to everyone else who has responded.

22

Mr. Motley,

I believe there is some good advice here as well as some horribly ignorant advice.

As far as some of the general advice you have received is concerned to "Never sell your minerals" that's just plain stupid. Mr. Cunningham is right on. That's like saying never sell your stock in XYZ Corp. - It could go up in value or start paying dividends. I purchase minerals for a living and I'm about to sell a large amount of minerals at the end of this month, because the math works out and I believe it to be a fair deal. There's no blanket statement that applies to buying or selling anything (minerals included).

You just have to do the math and see what makes sense. As I believe you are aware of, we are missing some key information here in the size of the property that your Aunt owns the interest to. Mr. Tooke estimated the tract or lot to be 30' x 70', or 2100 sq ft, or roughly 0.05 acre rounded. We can use that number as a good estimate. If she owned a .00005% interest in that lot, that would be insanely small and I would suggest you sell immediately no matter what kind of well was hit. However, likely she would own the entire lot and would have a .00005% interest in some unit of some kind? That's the only place I could see that .00005% number coming from.

So, if your Aunt had a .00005% interest her decimal interest would be .0000005. J. Michal mentioned the Eagle Ford Shale. Good Eagle Ford Wells are thought to have an EUR (Estimated Ultimate Recovery) of 300,000-500,000 BOE (Barrels of Oil Equivalent). That would make your Aunt's ultimate pay out from a great Eagle Ford well at : .0000005 x 500,000 BOE = .25 x $100/BBL Oil = $25. If the operator happened to drill 5 wells on whatever unit this was pooled into, that would mean $125 over the next 20-30 years. By that math, selling is the no brainer option, but I think we might be missing some information here or the .00005% number that was given to you was not correct. At these numbers, I'm not sure why anyone would be interested in buying these minerals/royalties at this price.

Some other things to consider:

Should a well be drilled, properly keeping up with royalties can be a time consuming task. When your royalties are $20,000 or $200,000/month, this is well worth your time. When your royalties are $5 per year, it's a total waste of time.

If this interest is an unleased mineral interest, her decimal interest quoted earlier of .00005% would be further diluted by the lease royalty. if she signed a lease with a 1/4th royalty, her .00005% would be diluted down to .0000125%.

Should/when your Aunt passes away, you will need to file her probate in Ward County. If she doesn't have a probated Will, you will need to draft Affidavits of Heirship or other documentation showing how the minerals passed intestate (this might take an Attorney's help). This all costs money. Refiling a probate will likely cost you $10-$15 for the first page of each document within the probate and $4-$10 for each additional page. Therefore, filing a 30 page probate consisting of 5 different "documents" would cost 5 x $15 + 25 x $5 = $200. This is more that what Clear Fork is offering you for the whole property!

I'm just trying to help you make a good financial decision and sometimes that decision involves selling the rights. At this point, however, it appears you need more information about the property itself before making an informed decision, so I think you're on the right track with researching the property and it's ownership.

Best of luck!