I have never heard of a company make an offer to "buy" a lease for a certain period of time. They must be wanting to lease your minerals for 3 years. Please specifiy if this is case and possibly porvide details in order that someone might be able to advise you on whether this is a good offer. On the other hand, there are companies that send out letters to "buy" mineral leases but if sold, the minerals become theirs just like selling land.
I checked the wording again in the letter I received yesterday and it states "we are offering to purchase
all or part of your oil and gas royalty interests in Lavaca County, Texas for a term of three years and as
long as oil or gas is produced on the subject lands, etc. After three years or cessation of production
if any, whichever occurs last, all royalty will revert back to you". My error is use of words...
charles s mallory said:
Dorothy:
I have never heard of a company make an offer to "buy" a lease for a certain period of time. They must be wanting to lease your minerals for 3 years. Please specifiy if this is case and possibly porvide details in order that someone might be able to advise you on whether this is a good offer. On the other hand, there are companies that send out letters to "buy" mineral leases but if sold, the minerals become theirs just like selling land.
dorothy: I have never seen this type of offer in my eight plus years of dealing in mineral rights. Maybe others have seen this type offer but I would do some serious investigation into this offer.
dorothy jackowski said:
I checked the wording again in the letter I received yesterday and it states "we are offering to purchase
all or part of your oil and gas royalty interests in Lavaca County, Texas for a term of three years and as
long as oil or gas is produced on the subject lands, etc. After three years or cessation of production
if any, whichever occurs last, all royalty will revert back to you". My error is use of words...
charles s mallory said:
Dorothy:
I have never heard of a company make an offer to "buy" a lease for a certain period of time. They must be wanting to lease your minerals for 3 years. Please specifiy if this is case and possibly porvide details in order that someone might be able to advise you on whether this is a good offer. On the other hand, there are companies that send out letters to "buy" mineral leases but if sold, the minerals become theirs just like selling land.
i received the same type of letter,but the offer was for a 1 year term and as long as oil and gas is produced if no production occurs the rights revert back to me. i am not sure if such offers are legit or a good idea
dorothy: In my opinion, the best way to handle your mineral holdings is to negotiate a lease for a set amount of time, I prefer 3 year max. with no extenisons. In your negotiations, agree on the terms of the lease (bonus/acre; % royalty, etc.) and then if a well has not been drilled within the lease period, negotiate a new lease with the current lessor or market your minerals to gain a new lessor. I am not in favor of selling minerals but each individual has their own financial situation to deal with. Main thing, take your time and negotiate in terms that you are satisfied with because if a well is drilled, you will be binded to the % royalty for the life of the well. Good luck in your decisions.
It sounds to me like the company is trying to deceive you into thinking you are only selling them the rights to your royalties for 3 years when in reality they know that production is about to begin in which case they will really be buying the rights for an indefinite period time (i.e. until production ceases, which could be 15-20 years down the road at which point the minerals will have little value). We have companies here in the Barnett Shale that pull the same stuff trying to prey on people that dont fully understand that the term of their lease is just the term that the lessor has to begin drilling operations, as opposed to the the full term of the agreement. Many people think when they sign a 3 year lease that their lease expires after three years regardless of whether the lessor acts. This company is hoping to capitalize on this same common misconception. If I were you, I'd set up a meeting with them in person at a neutral location and then just not show up.....
Sounds like something Aubrey McClendon would try to pull on a mineral/royalty owner. Let's don't give him any ideas. "and just not show up' sounds good to me.
You apparently own a portion of PROVEN MINERAL RESERVES (a term of legal art) through your lease agreement with the operator. The offering company wants to pay you for all or part of your PROVEN MINERAL RESERVES now in exchange for a long term benefit from those RESERVES and gamble that the benefit will be several times the risk money paid to you. Your downside and the added upside for the buyer will be the benefit from other formations and additional wells in which you will not share. The time of possession at 3 years is a smoke screen for wells in your area. You will probably not get your royalty back until you get your minerals back under the existing lease terms. In addiction, you could have a hefty tax bill for selling PROVEN RESERVES.
As always, informed knowledge of what you may be selling is paramount to your decision. There are better ways for the landowner to take "advanced royalty" from PROVEN RESERVES and still share in the upside benefit from the addition of proven reserves for your account. The decision to accept lease bonus money is minuscule to the potential loss of future production income.
Loren is right! Sounds like a creative con-artist at work here making you think it's for 3 years, but the catch is "as long as oil or gas is produced"! A big scam!! I found a well that was still producing after 50 years, so be very careful.
I naively got involved in two of these over the past 20 years. The property (mineral interest) was conveyed by a deed that specified that it returned to me if not producing within three years.
Deal #1 was being drilled, and later was producing. I would have been paid much more by this time if I had just not sold it.
Deal #2 actually reverted by to me and is now worth quite a bit. I thought it was gone until a landman called me wanting to lease.
For ME, the moral is NEVER sell anything. Unless you are sitting on the property and really know what's going on.