Chandler- Sounds like you are really just mad at your relatives for not doing their diligence like you chose to do. Why don’t you share some of your new found wealth with your less fortunate relatives? That should make everyone feel better.
nope, I’m mad with the unscrupulous mineral buyers ripping off unsuspecting and trusting elderly mineral rights owners. that’s what I’m mad about, and its revealing this thread has brought proponents of selling minerals out of the woodwork. holding on to minerals is not a 50/50 gamble when the rights are in the thick of old austin chalk and buda plays that appeared worthless until the advent of hydraulic fracturing revealed the treasures beneath. Hillcorp began drilling mid 2010, oh and trust me I’ve tried to share the wealth offering to buy their surface land rights, but they have refused.
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When you own property, whether minerals, surface, house, etc., there will always be people offering to purchase. It is not unscrupulous to send out inquiries as to whether or not owners are willing or interested in selling and then negotiating a sale at a certain price. If you fail to keep up with values and information on what you own, then that is your loss if you under-price your property. People of all ages undervalue their property and just sell out, without thoroughly researching. Same thing with signing a lease without taking the time to research to find out current bonus and royalty rates and lease clauses. Sometimes people also buy and overpay because they did not research or they just believed what someone told them, not just property but stocks and other items. Or they do not want to pay for an expert property inspection and then find out that there are many problems with the house they bought. It is regretful that your elderly relatives sold without discussing with their children or other family members. The family members should also take some responsibility for failing to closely watch over what the elderly were doing and take on some blame here.
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Good points, although I’d have to believe most people here (with the exception of you lurking mineral buyers) would agree it seems somewhat shady at best about the low ball offer letters coming in just in time the wells have been approved and are in the process of drilling.
t’s kind of like what fjonesiv said in a preceding post: Like “bringing a rubber knife to a laser fight”.
It’s not like buying a house, car, or other common items where tons of information is readily available everywhere and for free. But, then again, that’s how I found out about this forum and learned more about the technology of horizontal drilling, so I did a lot of searching around before making the decision to hold on to my minerals.
Just keep in mind as an average citizen: If you’re not dealing with a novice, odds are you are up against pros who probably have a lifetime’s worth of experience and know how to deal from the deck in their favor. Trust no one.
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Sir, Thank you for this post about the hundreds of phone calls and letters. We own minerals in Gonzales and mineral buyers have really been after us lately. Modern Exploration drilled some exploratory Eagle Ford wells around 2012 next door, they were a flop. Then later on EOG drilled an offset on us and look out they brought in some real barn burners, however those EOG wells declined to almost 100 barrels production per month, as production got down to less than 100 barrels a month, we started getting pounded with offers. The jist was add up your 3 recent monthly payments , divide by 3 to get an average and multiply by 60 to estimate what they would pay us. Sounds fancy and calculated, our monthly payments had gone from $9,000 a month to about $75 a month. At $75 a month average x 60 would be $4,500 to buy our mineral interest and lose our minerals forever. NO ONE from the mineral buyers mentioned we were getting pooled into a super unit We had been making 100k a year off these 5 years before.Then all of a sudden our land gets pooled into a EOG super unit with long 8,000 foot horizontals and new division orders came in for these underlaying super units. While this is happening our royalty payments flat line to $0. Man we really wigged out. No one is telling us what is going on other than signing division orders. The 2020 election was on the horizon and these sleazy mineral buyers were telling me if Biden wins he’s going to ban fracking, I asked them if that’s why we should sell why would you want to buy??? They gave us the old “we’re in it for the long haul” Anyway we hang in there, deflecting numerous phone calls and shredding mail offers. Then all of a sudden those super horizontals come to life and come in roaring with $25,000 monthly checks in later 2019. The mineral offers just end, the add up the last 3, get an average and multiply by 60 are no more, by the way that 3 month 20k average would In theory be a 1.2 million offer with their math. No more offers until about 6 months ago when those 2019 permit wells began rapidly declining to less than 2,000 barrels a month and then lo and behold the mineral offers crank up again and started getting the 3 month average multiply by 60 offers again. Same deal, these offers roll in and then all of a sudden new division orders come, similar time frame to you. It’s taken EOG about 7 months to bring these to production. Glad we didn’t sell either. Now all this being said we feel for our neighbors who signed with ME, they have seemingly done nothing to do to improve those wells in 13 years. It’s odd, seems like something new could be drilled they.
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well I have no responsibility for what my Uncle does, he sold his minerals in 2009 for what amounts to nothing now. IIRC he bought a new 2009 polaris ranger with the proceeds, likely now worth 75% less. in 2009 at the time he sold those minerals no one had approached us yet, prolly because we weren’t as juicy a target having only 1/3 what he had and being 30 years younger then my uncle likely not as much of an easy target My uncle really should track down the mineral buyers he sold to and ask them to spread the wealth or if he needs the money accept my money to purchase his ranch. That said the point of my original post is not about my uncle. It’s about similar tactics where the mineral buyers are trying to prey on people who they are assuming are low information mineral rights owners. if someone is reading my posts and you are being hounded not by a single buyer but by a bunch of phone calls, mail pieces, there is a reason this is going on and its not because some yahoo gambler is out there looking for a 50/50 gamble. Based on what I’ve seen from our 2009 offers to me and to what my uncle received it would seem these offers represented what amounted to 2% of at least the 15 year value of those mineral rights. let that sink in, 2%. and 15 years isn’t eternity either.
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Sounds like the kind of guy who even if he’d won a 100 million Powerball lotto ticket would be broke after about 5 years.
yea except he’s not a smoker
Never going to sell. I realized years ago that I was getting offers shortly before a division order arrived. So when I get offers, I consider that something good is coming!
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How do you think these insider buyers are keeping track of all these areas and about the division orders before people get them? They seem to know when production is imminent too, even prior to postings on the Texas RRC.
I’ve got some time, I’m just going to lean into banging head against wall. 
It’s Wed, what’s 650 words amongst friends.
I apologize if I wasn’t clear prior. It’s not a coinflip. On just about any transaction that doesn’t involve actual work or goods produced, there just happen to be the same ratio of winners as there are losers. So, your uncle being a loser and you being a winner isn’t particularly newsworthy. Every transaction, somebody wins and somebody loses and, in general, nobody really cares about anybody else’s big win or bad beat except as it relates to their own life story. Obvious, sure.
Every single person who bet on the Eagles to win the Superbowl won. In all those bets, the other side lost. If somebody looked at a few months of PetroHawk results in 2009 and envisioned another 30,000 Eagleford wells and went and bought minerals, they most definitely won. Bigtime. All of those people. We know that with 100% certainty today. Similarly, if you had the minerals and decided not to sell them, you won. If you sold in 2009, you lost. End of story. I don’t think it was as clear in 2009 what the smart move was, but it’s easy to pretend as such today.
It’s not just Eagleford. Oil volumes in this country have more than doubled since 2009. If you were buying minerals in that timeframe anywhere, the odds are much more than 50/50 that you were the winner and not the loser. Obviously. But nature abhors a vacuum. If there is a bet where one side wins 80% of the time, eventually more and more people fight over the right to make that bet…and that changes the odds. The more people who are buying minerals, and the more money that goes into buying minerals, the more likely that selling minerals is a reasonably solid choice today. I think it’s correct to think that over the past 15-20 years, in general, selling minerals was a bad idea. Will still have to wait 15-20 years to tell for sure who is the winner and loser from this point forward.
It’s easier to think of it as witchcraft for some, but buying minerals is writing a loan. You give somebody a lump sum today for the vague promise of more money down the line over a 30 year timeframe. Today minerals is a competitive market. In any sort of competitive market, the easiest way to get that loan is to offer the person the biggest lump sum (effectively the lowest interest rate). If you are writing no loans, you are failing. So you have to offer whatever it takes to make loans. At some point it’s like real estate in 2007, you have five loans out to a stripper who can only make payments if they can refinance every 2 years and take out equity. That’s not a business or a plan, that is just hope. There is a pretty good chance you are going to wake up one day and realize that you are not the winner. Maybe that is happening, maybe it isn’t. It sure seems it will happen at some point, things tend to go to their tulip phase and tip over. People can’t help themselves.
And as a last note. None of this land was given by God to the people. Unless you are a native Comanche or something, if you own Central Texas minerals today, the route from 1800 to you has some past transaction in the grant/patent or chain of title that almost assuredly contains something worse than a lowball offer to Granny. Nobody loves shady stuff, but that’s the story of everywhere.
That is my take as a mineral owner, holder, seller, buyer. Carry on.
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ours are 1825 rights, from Mexico, so wherever Mexico took them from.
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Oh wow, you are talking about me! Im quite flattered. Your section never got the highball offers but Im glad that your 160 acres was drilled and had 4 good horizontals drilled on it, congrats to you sir, but you are the exception not the norm. No need to get into a pissing contest, every company that was throwing out those highball offers are no longer in business because they paid too much money for the minerals, plain and simple. For every story like yours, theres 5 others that went the other way. But I stand by statement that had you got a highball offer of 20K an acre on 160 acres, youd still be in the same place now had you sold your acreage and invested all the money but with more options at the end of the day.
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who was being offered $20,000 per net mineral acre ?? in Gonzales try more like $3,000 an acre for Tier 1 acreage in 2010, I realize Mike T is in Oklahoma but the big EOG barnburners royalty owners were being offered 3k per net mineral acre. Truly a low ball offer. At the time it seemed alluring as in 2010 rural land in Gonzales was selling for $1,500 an acre, so to have some carpetbagger roll in to town and offer 3k an acre for minerals and let you keep your terrestrial land seemed an offer to good to be true. in 2010 there were quite a few old timers who believed all the oil was gone from the failed 1980’s austin chalk bust. Remember what Jett Rink said, “you thought old spindle top and burkburnett was all the oil there was didn’t you??” Well that kind of thinking the oil was gone and sales weasels offering 3k an acre seemed like too good of a deal to pass up. At least in Gonzales & Dewitt if you sold 160 net mineral acres for 3k an acre for 480k and then held tight after taxes and invested what likely would be $265K x 15 years at an average annualized return of 8% would be $840,624.82. Not to get into a pissing match but that’s a very low monetary number for 160 acres of Tier 1 acreage in the oil window of the eagle ford 15 years later.
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This debate focuses on “should sell the minerals, lease the minerals or sit tight”. The best way for the knowledgeable members here to help is to keep us updated regarding new permits near the mineral owner’s acreage, along with any sustained production rates and nearby leasing. What to do with the minerals is a probabilistic issue with no 100% answers. Nobody has a crystal ball. Please let the minerals owners know what you would do in a specific situation, without attempting to press a universal approach. If you don’t have solid info regarding nearby activity of the above stated nature, you just take us down a rabbit hole as has just occurred in the above back-and-forth.
Even better is for new or less experienced mineral owners to learn how to watch state websites for permits and other data themselves. In Texas, it is easy to look at permits on or near your minerals, either using GIS viewer or looking at the permits and plats under permit queries. On the county deed record sites, you can track your leases as they are assigned over time so that you know which company (or companies) owns your lease. Download permits, plats, completion reports, etc to an electronic folders or print to physical files. Keep copies of everything that you sign. Read and understand your lease. Sign up for NARO seminars and attend state conventions where you can meet other owners and learn how to manage your mineral assets. Talk with other family members who own minerals and band together to share information. Your heirs will thank you.
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$20K??? I’d had taken the money and run!