Outrageously high offer legitimate?

We recently got an offer from the following company for 6.666 acres in Section 8, Block N, HE&WT RR Co. Survey, A-633, Upton County, Texas offering $1,172,510.03 and wondering how we find out if it is legitimate?


Googling company brought up this info:

Company Name: RISING PHOENIX ROYALTIES, LLC
File Number: 0802520376
Filing State: Texas (TX)
Filing Status: Active
Filing Date: August 15, 2016
Company Age: 3 Months
Registered Agent:
Rising Phoenix Resources, LLC
1925 Cedar Springs Rd Ste 104
Dallas, TX 75201
Principal Address:
1925 Cedar Springs Rd Ste 104
Dallas, TX 75201-1783

According to Texas State public records, Rising Phoenix Royalties LLC was registered as a new business entity by Rising Phoenix Resources Llc on September 7, 2016.

CANNOT IMAGINE THIS COULD BE ACCURATE. CALL AND TELL THEM YOU WILL ACCEPT THEIR OFFER!!!!!!!!!!!!

Thanks, John...just didn't want to get involved with anyone looking to 'bait and switch' or someone that is not ethical (and don't know this one way or the other about this particular company/person).

If offer did not specify price per net mineral acre, likely to be based on 100% of acres. Or maybe just to suck you in

Hi Nancy -

If someone offered you that much money for 6.666 Net Mineral Acres, they're either crazy or they know something you don't. A whole lot of something you don't. Like maybe you have more than that in suspended royalties waiting for you to claim it and they are trying to use your own money to buy you out.

I will see what I can find out about what is happening in your area and get that to you. Is your interest in the entire Section or in a smaller tract?

Please scan in the letter you received and either post it here or accept my invitation to become A Friend on The Forum and send it to me privately that way. The way they word them is now people sometimes get trapped.

I very strongly advise that you (a) consult an experienced Oil and Gas Attorney about anything like this and (b) until you know a whole lot more about what's going on, don't sign anything or even verbally agree to anything.

Also, note that the company is only a few months old... virtually zero verifiable Street Cred. And that it is located in Dallas, which is chock full of less than reputable companies.

Hope this helps -

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

I believe TennisDaze has the correct answer, that is what you would receive if you owned the whole section and sold. Proportionate reduction would make it about $1,800 per net mineral acre. It's a nice but misleading WOW number to lead off with though, isn't it? Why would someone send you a non-binding offer for seemingly "Stupid Money"?

Part of the trick is to get people to start thinking about selling their minerals to begin with. If you were sent an offer of $12,000 for 6.6 net mineral acres, it might not mean that much to you and you might throw it in the trash out of hand.

This letter got the buyer in the door, right? Now you can negotiate what seems like a reasonable price for 6.6 acres you were not even looking to sell?

An unscrupulous buyer might even offer you more than you think it is worth? And when you received the sale contract it could be worded in a way that could be construed that you are selling all mineral interests that you own in the state.

If I wanted to get the better of you in business the first thing I would need to do is open the dialog? The letter you received is interesting at first glance, was it not?

I would definitely not call them up and tell them I accept.

Nancy -

I noticed that you and someone else with the name Connally are included in the Pembrook Unit in NE Upton County. That is a huge Unit containing over 42K acres and with 325 or so Wells in it.

Sec 8, Blk N is part of the Pembrook Unit. I hope they aren't trying to steal your interests in the entire pooled 42K+ acres, because it appears that Pioneer is drilling Horizontal Wells in it (See the information on the Pembrook Unit No. 905H attached).

Aside from that, I was able to find that three Horizontal Wells were completed last Spring by Pioneer that include Section 8, Blk N in their 1,118.7 acre Lease: The Brook M-1A No. 1H, the Brook M-1B No. 2H and the Brook M-1C No. 3H.

Note that these three Wells are not Pembrook Unit Wells. I have attached some preliminary information for you on them and have a fairly comprehensive set of information on them if you would like that but I could only attach so much to a single message.

It appears that these three Brook Wells first produced in March 2016 and that through August 2016 have produced a cumulative 359,619 Barrels of Oil and 1,101,226 MCF of Gas.

I wasn't able to determine what they are getting for the Gas, but between May and July 2016, they averaged $42.361 per barrel, which calculates out to roughly $15,233,820.46 total gross over the past 9 months. The three are averaging a combined 1,667 BOPD and 1,904 MCFD today.

I don't know your interest amount or the specific lands they are in, but like I mentioned earlier, they may be trying to buy your interests using your own money.

In simplest terms: Don't Sell. If you haven't received any royalties from these three Brook Wells yet, you may have a sizable first check coming.

Hope this helps -

Charles

688-NANCYJANECONNALLYINTERESTSSECTION8BLKN.pdf (137 KB) 689-3COMPLETEDWELLSSPREADSHEET.xlsx (11.9 KB) 690-PEMBROOKUNITNO.905H.pdf (147 KB)

Thank you TennisDaze. Yes, was told some time ago to always get price per acre so one is comparing apples to apples. Have not yet contacted the person who wrote the letter, but have done some research on their company and the other companies they are associated with.

Thank you TennisDaze, have not contacted the author of the letter. Was told some time ago to always compare price per acres so that one is comparing apples to apples. Have done some research on the (new) company and the previous companies the author was or still is affiliated with, Palo Petroleum in Dallas, TX which has had some problems/lawsuits.

Hi Charles: Was a bit surprised that their offer letter contained not only the informaiton Pembrook Unit Tr. 4 but that they had the royality interest decimal amount found on the original division order for the old vertical well. We have recently signed 3 new division orders for the horizontal drilling. Unfortunately don't have the capacity to scan, but perhaps next week can get my sister to do so, and perhaps privately send them to you.

There are several Connally's that have mineral interests in the same tract. My sister and I each have 3.333 acres, a cousin 6.666 and some others.

So appreciate you taking the time to share your knowledge and expertise. Will friend you on the forum and send you some additional info on latest royalties paid.

Hi Charles: Could you send me a friend request on this forum? It's rather complicated and with limited computer skills cannot find the way to 'friend you'.

Thanks,

Nancy.

Now that you have described that you only own 3.333 acres, the Million Dollar offer was definitely some kind of scam.

Maybe they are trying to slide your interest in the Pembrook out from under you at the same time...

You should maybe consider getting in touch with your cousins and forewarning them about the potential scam. Especially if any of them are up in their years.

You click on somebody's name where it appears in BLUE. But it appears I already sent you an invitation.

Scroll to the top of this message string and look to the right. You should see your own name and things like "Inbox".

think that offer amount was for the 1/2 I own of 3.333 and the 1/2 my sister owns for 3.333 total 6.666.

$1,172,510.03 / 6.666 NMA would be $175,894.09 per NMA.

In the words of a beautiful woman I once knew: "Buddy, it ain't gonna happen..."

:-) Have said that myself a time or two in the past, Charles!

Mutter, Mutter, Mutter...

Mutter.

In the movie "Paint Your Wagon" Lee Marvin had a line that I have loved since I first heard him recite it:

"I've never understood why a woman would want to make one man so miserable, when she could make so many men so happy!"

Mutter...

Done...we're now 'friends', and have messaged you. Thanks, Charles.

???

It ended up following the wrong message. You had said that you had said "Buddy, it ain't gonna happen" a couple of times in the past.

I was attempting a funny snappy rejoinder. Maybe it didn't work.