Thank you very much Texas Tea for taking the time to write such a detailed response. I'll be sure to get back once I learn more about this property. Who knows, there could be a Wal-Mart sitting on this property and she didn't receive her portion of the land sale. :-)
Wal-Mart ... the Neiman Marcus of the country. (I just couldn't resist.)
Cheers,
Pat
Dear Mr. Motley,
It may seem like a bother to get letters about buying mineral rights, but normally if there is a flurry of activity, this usually means that the landmen that do the research on ownership know there is something that will start to be developed soon. There are not only royalty dollars to be made, but I am thinking that the bonus money for signing a lease may also bring the same amount of money. As everyone says, hang onto to those mineral rights.
Mary Ellen Denomy, CPA, MBA, APA, MAFF
Ms. Denomy
To make a blanket statement to hang onto minerals is a bad business decesion. There are reason to sell, just as there are reasons to keep. Each individual knows their own personal financial situation but to say never sell is just plain dumb.
Would you advise your clients to never sell stocks that they own?
Charles Cunningham
Mary Ellen Denomy said:
Dear Mr. Motley,
It may seem like a bother to get letters about buying mineral rights, but normally if there is a flurry of activity, this usually means that the landmen that do the research on ownership know there is something that will start to be developed soon. There are not only royalty dollars to be made, but I am thinking that the bonus money for signing a lease may also bring the same amount of money. As everyone says, hang onto to those mineral rights.
Mary Ellen Denomy, CPA, MBA, APA, MAFF
Pat, you shouldn't insult Wal-Mart like that.
Tee Hee.
Ms. Pat Malone said:
Wal-Mart ... the Neiman Marcus of the country. (I just couldn't resist.)
Cheers,
Pat
In this case, Mr. Cunningham, selling the mineral rights at $125 does not seem prudent, I did not say NOT TO EVER sell mineral rights. If you read my text, I was reiterating the language of those others that had commented to this inquiry. One must look at the age, heirs, value and needs of the party that is looking to sell their minerals on an individual basis.
Mary Ellen Denomy, CPA, MBA, APA, CFD, MAFF
Charles Cunningham said:
Ms. Denomy
To make a blanket statement to hang onto minerals is a bad business decesion. There are reason to sell, just as there are reasons to keep. Each individual knows their own personal financial situation but to say never sell is just plain dumb.
Would you advise your clients to never sell stocks that they own?
Charles Cunningham
Mary Ellen Denomy said:Dear Mr. Motley,
It may seem like a bother to get letters about buying mineral rights, but normally if there is a flurry of activity, this usually means that the landmen that do the research on ownership know there is something that will start to be developed soon. There are not only royalty dollars to be made, but I am thinking that the bonus money for signing a lease may also bring the same amount of money. As everyone says, hang onto to those mineral rights.
Mary Ellen Denomy, CPA, MBA, APA, MAFF
No, you just back up never sell in a different way "As everyone says, hang onto to those mineral rights."
Mary Ellen Denomy said:
In this case, Mr. Cunningham, selling the mineral rights at $125 does not seem prudent, I did not say NOT TO EVER sell mineral rights. If you read my text, I was reiterating the language of those others that had commented to this inquiry. One must look at the age, heirs, value and needs of the party that is looking to sell their minerals on an individual basis.
Mary Ellen Denomy, CPA, MBA, APA, CFD, MAFF
Charles Cunningham said:Ms. Denomy
To make a blanket statement to hang onto minerals is a bad business decesion. There are reason to sell, just as there are reasons to keep. Each individual knows their own personal financial situation but to say never sell is just plain dumb.
Would you advise your clients to never sell stocks that they own?
Charles Cunningham
Mary Ellen Denomy said:Dear Mr. Motley,
It may seem like a bother to get letters about buying mineral rights, but normally if there is a flurry of activity, this usually means that the landmen that do the research on ownership know there is something that will start to be developed soon. There are not only royalty dollars to be made, but I am thinking that the bonus money for signing a lease may also bring the same amount of money. As everyone says, hang onto to those mineral rights.
Mary Ellen Denomy, CPA, MBA, APA, MAFF
For the average mineral owner to get the better of someone who buys and sells minerals for a profit, it's not going to happen unless the buyer does it to himself. That leaves a miniscule chance that the mineral owner is going to get a good deal.
People in the profession of buying and selling minerals have a different perspective, if they sell something too cheap, they have a chance to make it good on the next property they buy. If you make a dozen deals a year, one poor one is probably not as important as getting a poor deal on the only time you ever sell. How many people have you heard of making a poor deal on an automobile purchase? How many car salesmen do you think make poor deals when purchasing a car, when they already know exactly how much the dealer paid for it? Most mineral owners don't have that kind of knowledge, if they did, they wouldn't be here.
Someone recently brought to my attention that a mineral owner who did not know what he was selling signed a deed selling what he did not own and got 10 years in prison. Now then, do you want to risk 10 years in prison to get a poor price for your minerals with a miniscule chance that the person/company buying the minerals makes a money losing error? $125 would not even pay for the legal help you would need to be sure that you aren't selling anything you don't own. Then there is the elderly man who sold his producing mineral rights for $50,000, ten years worth of royalty or more at the present rate. He did not take the contract to a lawyer and the contract made the sale effective back to first production. The seller received $50,000 but then he OWED the buyer $300,000 for all the royalty he had received since first production.
It's not a matter of should you never sell or not, it's a matter of can you afford to sell with/without professional help? The penalty for not knowing what you are doing could be far more than the chump change you are offered to sell your small mineral or royalty interest.
Spot on reply RW when I made my first reply, the family had just come from a meal at buffalo wings, the cost with a generous oil money tip came to 125.00 right now I seem to remember the meal, but that memory is fading as we speak.
Potential is what I speak of when I say "Never sell" And really who knows what the future will bring? Potential dismissed for a mere pittance or a avoidance of paperwork, is not really smart for the average mineral owner.
I do admit, every circumstance is different, however I stand firm on my Never Sell statement, for a vast majority of us, that is the best advice. IMHO and with my two cents, Brian...
William -
Are you still following this string of messages?
Charles
Charles Emery Tooke III said:
William -
Are you still following this string of messages?
Charles
Yes, I've been out of State for 10 days with intermittent internet service and am now just catching up on "stuff"
William -
Your Grandmother's interests may be included in the South Monahans Queen Unit, which appears to be a Fieldwide Unit, made up of about 40 wells.
I haven't looked for a map of the Unit, but the following link will allow you to download a map and list of the wells, as well as the Mineral Appraisal Roll from the Ward County Tax Office.
https://www.hightail.com/download/UlRSckhTSWVQb0ozZU5Vag
If you will notice, the 2nd column in from the right shows the last month's production: 33.58 Barrels of oil per day. While that is about $3,358.00 a day, your Grandmother's Interest of 0.00005 amounts to about $0.1679 a day or about $5.12 a month.
The Royalty Division Order probably includes wording to the effect that they won't send out checks until the royalties due amount to more than $100.00, but I believe the State requires them to send out checks at least twice a year.
As to why someone would want to buy such small interests, I can only speculate that there is something on the horizon. I know that there is a lot of drilling activity in West Texas right now.
Hope this helps -
Charles
Thank you so much Charles. Great information
If it is not already a Secondary Recovery project, where they inject water or CO2 in the outer wells to push oil towards the center wells, then it might be soon. That sort of thing greatly increases the production until the last little bit is squeezed out. Everybody involved gets their share, even after their portion of the formation is bled dry. It's called a Fieldwide Unit when they do that.
Charles,
I finally had time this morning to check out the link you sent. Sir, this is amazing. How you found all this information is beyond me but it's exactly what I was looking for.
I have a number of questions for you if you don't mind. Not being familiar with "forum etiquette" is it ok to address those questions on the forum or directly with you via email. Either is fine with me.
Either way. The Forum is pretty open, however, if you would prefer to communicate more privately we can do that through the Friends Section or we can exchange personal contact information through the Friends Section and communicate that way.
I will send you my contact info through the Friends Section and you decide.
Charles
Mr. Motley, a lot of us have been following the discussions here from the beginning and would be very interested in knowing your final recommendation to your aunt…to sell or to keep.
At this point I've decided to advise my Aunt to keep her mineral rights. I've based that on not really having enough information to advise her otherwise. I've recently received a significant amount of information that I'm currently evaluating.
I appreciate all the advice from everyone. Sure didn't anticipate the emotional levels of some of the comments.
While I understand the thought of many to "never sell your rights", I'm still hesitant to accept this blindly. I've confirmed there are producing wells on the property but the production has been so small that in 21 years she hasn't yet to qualify for a royalty check of even $100.
Yes, there could be a "gusher" over the horizon and if she did sell then 20/20 hindsight would have been not to, but you can't go through life second guessing your decisions.
Thanks again everyone.
Mr. Motley, do not assume that if the property made $100 that the oil company would have automatically sent a check. Operators frequently have to be hounded to send out division orders and if they won't send out division orders, they likely aren't going to send out checks either. Has the operator ever sent a division order? I believe there is a statute that whether the check amount reaches $100 or not, a check should be sent by a specified time for whatever royalty has accrued. Where might that check be? You should at the very least be requesting a statement to see how much has accrued. Good luck.
Dear Mr. Motley,
I think that your decision is wise.
I am not one of those "one size fits all" pundits who blindly and with no flexibility offer up advice of never selling mineral rights. What amazes me is that they will pretty much call you stupid if you disagree with them. Passionate ignorance is not bliss.
Not everybody is yolked the same financially. And those financial situations could change overnight. Consider things being great one day and then being tasked with managing health care costs that could easily end in a medical bankruptcy, for example.
I have sold working interests and overriding royalty interests in good producing wells and for very good reasons and the people who offer advice of never selling would do the same thing if faced with my options.
Perhaps they are referring to people who want to cash out a mineral interest so that they can then wisely buy a RV or bass boat or something. But their advice put no such qualification - just never sell is what they said.
Best of luck to you and your mother.
Buddy CottenWILLIAM A MOTLEY said:
At this point I've decided to advise my Aunt to keep her mineral rights. I've based that on not really having enough information to advise her otherwise. I've recently received a significant amount of information that I'm currently evaluating.
I appreciate all the advice from everyone. Sure didn't anticipate the emotional levels of some of the comments.
While I understand the thought of many to "never sell your rights", I'm still hesitant to accept this blindly. I've confirmed there are producing wells on the property but the production has been so small that in 21 years she hasn't yet to qualify for a royalty check of even $100.
Yes, there could be a "gusher" over the horizon and if she did sell then 20/20 hindsight would have been not to, but you can't go through life second guessing your decisions.
Thanks again everyone.