Out of the Blue Offer to Buy Mineral Rights We Did Not Know We Had

General Mineral Rights Discussion
1

My mother (who is elderly) was recently contacted by a Landman with an offer to buy (on behalf of an investor) mineral rights that she has apparently inherited. She was not aware that she had inherited these rights, so this was a contact out of the blue.

The amount of money she was offered was substantial (at least for us) and the request was for her to sign what appears to be a quit claim deed transferring her rights to all oil, gas, and mineral rights.

The advice that I am seeking is basically how to proceed in this situation. That is, I am seeking a roadmap for what to do when approached out of the blue with an offer to purchase mineral rights.

We have no experience whatsoever in this area. The amount of the offer in this case is large enough that hiring some professional help would probably make sense. Should I first seek out a Landman or should I look for an attorney or both?

It seems to me that they key issues are: (1) does she really own these rights; and (2) what is a fair value for the rights. I am assuming that she really does own the rights or she would not have been approached by the Landman, but it would be nice to know for sure. It seems to me that the fair market value should be determined by offering the rights to multiple buyers. How does one find such buyers?

I have done some internet research to try to find the Landman and the investors, but there seems to be very little information about them. In fact, I find it quite surprising how small the internet footprint seems to be for these people.

The Landman appears very professional and appears to have been very forthcoming. He has put a little pressure on us to make a decision quickly. So another question I would have is whether or not there is likely to be any real reason to rush. Also, I am wondering if there is any reason that these rights would be valuable to only one investor (for example if they were attempting to assemble a parcel) and not to others more generally. That is, are we dealing with the "value" of the rights to this investor or to a market of investor's more broadly.

If the next step for us to take is to find a Landman and/or an oil and gas attorney, how do I find good ones that will represent my mother’s interests. Also, does it matter if they are located in or near the county in question. The county is in TX so I understand that they would need to be in TX. But do they need to be in or near the county.

Any help would be appreciated. I have seen some related questions in the forums (but not exactly like this one).

Thank you,

George Easton

2

Mr. Easton, you need to know what you own and that would probably involve hiring a landman or a mineral manager to discover what you own. Another factor is that there could have already been production of these mineral rights and there could be a substantial amount of money waiting for you already. I point this out because there have been cases where some sharp oil industry person has bought out someones interest basically with that persons own money. There may be a need for haste, but for me it would be haste to discover what you own so you could make an informed decision on what you wish to do with it. I would find out the nature of what I own, then hire an attorney to do what is necessary to get it into my name and to get paid for existing production if there is any, then consider any offers which I may receive or have received.

3

Mr. Kennedy,

Thanks so much for the reply. Can you give me some guidance with respect to how I go about finding a competent Landman or Mineral Manager to do this kind of work?

I sounds like the work is akin to a title search but the person would also then need to be able to determine what, if any, production has occurred.

I saw someone sign a post here with "certified landman" and have since discovered the AAPL. Is this a good place to start? I don't seem to find a list of landmen on the AAPL website though.

Any guidance as to what to ask any landman that I approach to hire? That is, how do I interview a landman.

Also, I am not precisely clear as to what the difference is between a landman and a mineral manager.

Finally, would a lawyer be the place to start?

Thanks,

George Easton

4

Mr. Easton, I think I would go first to a mineral manager, I would recommend Buddy Cotten from this forum. Buddy is a friend of mine but that is not why I would recommend him. Charles Emery Tooke III is another here, if he isn't on my friends list, he should be. I believe that the mineral manager will give the most bang for the buck because it's landman services with added value. The added value could be in things like geology. I think you can find landmen out there who do little but procure executed leases. Other landmen probably do little other than check title. I think you need the help of someone who can provide what you need, all under one roof. These two are located in, and/or do a great deal of work in Texas. I would wait to hire a lawyer until you know what you own. There may be lawyers out there with great landman skillsets but they will probably be charging lawyer rates, multiple times the hourly rate of a landman. Mineral manages also give business advice and when the time comes they will probably advise you to get a lawyer to perform a certain action for you, at which point you will probably fondly remember the days when you wrote a check to the mineral manager.

George S Easton said:

Mr. Kennedy,

Thanks so much for the reply. Can you give me some guidance with respect to how I go about finding a competent Landman or Mineral Manager to do this kind of work?

I sounds like the work is akin to a title search but the person would also then need to be able to determine what, if any, production has occurred.

I saw someone sign a post here with "certified landman" and have since discovered the AAPL. Is this a good place to start? I don't seem to find a list of landmen on the AAPL website though.

Any guidance as to what to ask any landman that I approach to hire? That is, how do I interview a landman.

Also, I am not precisely clear as to what the difference is between a landman and a mineral manager.

Finally, would a lawyer be the place to start?

Thanks,

George Easton

5

Mr. Kennedy,

Thank you again. I will contact Mr. Cotten and Mr. Tooke.

George Easton

6

Quite often, when out of the blue a company makes a proposal to purchase one's minerals, there is a reasonable expectation on their part that there will possibly be exploration/production in the near future. It could be that the minerals are in a "hot" area, or an area that looks promising. You never know for sure, but I definitely agree that you should not consider selling until you know exactly what you own and anything else you can find out about your minerals and what's going on with them or nearby. You will more likely than not, I suspect, decide to not sell. That is always my recommendation.

7

Very well said Mr. Kennedy! I have personal dealings with Buddy Cotten and he is outstanding!

r w kennedy said:

Mr. Easton, I think I would go first to a mineral manager, I would recommend Buddy Cotten from this forum. Buddy is a friend of mine but that is not why I would recommend him. Charles Emery Tooke III is another here, if he isn't on my friends list, he should be. I believe that the mineral manager will give the most bang for the buck because it's landman services with added value. The added value could be in things like geology. I think you can find landmen out there who do little but procure executed leases. Other landmen probably do little other than check title. I think you need the help of someone who can provide what you need, all under one roof. These two are located in, and/or do a great deal of work in Texas. I would wait to hire a lawyer until you know what you own. There may be lawyers out there with great landman skillsets but they will probably be charging lawyer rates, multiple times the hourly rate of a landman. Mineral manages also give business advice and when the time comes they will probably advise you to get a lawyer to perform a certain action for you, at which point you will probably fondly remember the days when you wrote a check to the mineral manager.

George S Easton said:

Mr. Kennedy,

Thanks so much for the reply. Can you give me some guidance with respect to how I go about finding a competent Landman or Mineral Manager to do this kind of work?

I sounds like the work is akin to a title search but the person would also then need to be able to determine what, if any, production has occurred.

I saw someone sign a post here with "certified landman" and have since discovered the AAPL. Is this a good place to start? I don't seem to find a list of landmen on the AAPL website though.

Any guidance as to what to ask any landman that I approach to hire? That is, how do I interview a landman.

Also, I am not precisely clear as to what the difference is between a landman and a mineral manager.

Finally, would a lawyer be the place to start?

Thanks,

George Easton

8

Thank you all for the help. With the advice and contacts you have given me I think I will be off to a good start. If you are interested, I will post how this all plays out.

Thanks again,

George Easton