Yesterday I received a letter dated June 8, 2012 from an outfit called Royalty Clearinghouse with an offer to purchase some royalties that I own in some producing wells in Texas for a total of $13,000+. I called them back to accept the offer since the rights are not worth nearly that much. I was then told that they could only pay me $3,700 instead of $13,000. They recited some canned rhetoric about how natural gas prices are dropping, etc. so they cannot honor their offer anymore. I told them that falling gas prices is not fresh news, and that the letter was dated June 8, 2012, so surely they weren't telling me that between June 8 (when their letter was dated) and June 11 (when I called) that the world changed so drastically.
Anyway, I was fully expecting them to not honor the offer that they sent. Frankly, I'm sure they are having the same conversation with their tails between their legs with dozens of others who call in trying to accept their offers. I share this news simply to let others know that most of the companies sending you letters to purchase your minerals or royalties are fools and to encourage you to not be afraid to try to sell your royalties should you feel that you have received a good offer, since there's a decent chance that the guy on the other end of the line is a moron and sometimes you can take advantae of them (though not in this case for me unfortunately).
Actually, I think Royalty Clearinghouse has had the last laugh on a number of deals where they offered far below market value and received an immediate acceptance by the mineral owner. What you experienced could actually be a tactic they employ, rather than evidence that they are ignorant. The goal of the letter is in part just to get the mineral owner to call in, and then they give the owner there schtick about why they can only offer X amount.
I think that both Ben and rw are correct. This bait tactic is used in all forms of sales in that the first trick of the game is get the customer on the line. One of the more common bait practices is the tour of a resort area whereas one of four great prizes are to be given away. Always, one prize looks good on paper but is in reality a joke. Guess which prize you get? Letters from businesses like Royalty Clearinghouse goes in my shredder immediately.
From my experience, it's very difficult to impossible to make accurate mineral valuations without running title and/or having proof of revenue. Otherwise, you have no idea what the oil company thinks/knows a person owns.
Unsolicited offers should have a disclaimer that reads:
"We don't really know what you own, but we know about where it is and think we want it. Until you respond, I'm going to try every sales tactic I can"
Actually in this case their offer letter listed each well that I owned an interest in and that they were offering on, and it correctly identified my payment decimal (NRI) in each well. So, they knew exactly the ownership that I was credited with by the operators, which makes the valuation very straighforward. On top of that, the letter was just sent out a few days ago so they (should) know exactly what I earned for the last month of production and every month prior. Therefore, the only plausible explanations are a) intentional deceit b) unintentional incompetence, or c) both. I think it's most likely c). Most likely whomever generates their offers is the same muppet who came up with their company name.
Royalty Clearinghouse sounds like a 'Sneaky Snake' group. I think I would wait for a legit offer from someone else. Yes, I was laughing as I was reading your post. Have a good day.
Jeremy, did your family member have any luck leasing his Divide county, ND acres with the off confidential well awaiting fracking on them ? I'm not a landman but I wouldn't even have tried to lease thinking that the continuing operation clause would have them held.
Read that offer letter again carefully and look for any disclaimers. If you see none, I wouldn't be shy to call them back and tell them that you expect them to honor the offer and when they refuse, ask them how that letter could be considered anything other than bait and switch. If they can't point you to the disclaimer, or have some other excuse that doesn't pass the smell test, then tell them that you will consult an attorney that is knowledgeable with bait and switch.
I have sold to Royalty Clearinghouse twice over the past five years, and have had none of the same experiences as you. I first sold my royalties in Ector County, Texas. After receiving their letter, I sent in my check stubs for review and received an updated offer a few days later which was higher than my original offer. The closing process was quick and discreet, and they paid me 10 days after I agreed to the sale price. I sold to them again just a few months ago and the process was just as smooth as the first time. I have a few other o&g properties in Teas that I will probably sell to Royalty Clearinghouse as I get older.
There's an old saying that when you sit down at a card table, if you can't spot the sucker in the first half hour at the table, then you are the sucker. Elizabeth, In this case, Im sorry to say that if you accepted one of these low offers, then you are the sucker (even if they made you feel like you got a good deal). Either that, or you work for this sham of a company and are trying to protect its integrity when there really is no defense.
What is the point in being offensive to someone who had an OK experience with these people just because you did not? Royalty buyers have their "methods," and that is to get you into negotiations with them to buy your minerals or royalty thru mail-outs. Its sleezy, sure, but the method is about 50 years old now and you should have been suspicious in the first place and simply trashed the offer. Nobody has a gun to your head to sell these minerals. Elizabeth I think offered her opinion, politely, now you have essentially called her a name or implied that she works for royalty buyer. Good grief.
These forums; people can be very rude and so easily leave their Texas manners in the closet with yesterdays socks. I think it is the power of the written word, in internet obscurity, that makes people behave differently than they would for instance if you were actually looking at the person and conversing with them. Maybe I am wrong, maybe being polite for the sake of being polite is a thing of the past.
Or is it just the oil business that evokes so much anger in folks. I would like to know if there were a baggage claim forum, or an overcharged from the plumber forum, or a missing order of french fries forum if people get as angry as they do at anbody that has anything to do with...oil.
Mike, I think it is the oil business, and shills for companies are here, aside from the oil people who have as their first post blatant advertising with no intention to add any other content. I recently replied to one such telling him they sell advertising here, then reported them. I wonder if your minerals can be compared to not getting your fries at the drive thru? Maybe that wasn't a good analogy? Tell you what, you draw up the deed for your minerals and let me know where you want the fries and we'll arrange a swap. Have a great day.
I take it then, Mr. Kennedy, that calling people names and generally being impolite is plenty good with you as long as the recipient is in the oil business or has anything to do with the oil bussines, or who might simply wish to counter any sort of anti-anti-oil "content" to the debate?
I understand. What I don't understand, and don't even want an explanation for, is how angry people are at the very industry they need, that they cannot do without, to develop the minerals they have...to make them worth more than french fries. I don't know what line of work you are in, except blogging a lot, are there not bad apples in your profession? Of course there are, there are dishonorable people in all walks of life, everywhere. I'll continue to manage my minerals, they are not for sale, thank you; I'll keep my Texas manners also. Good day to you, sir.
Mike, the difference is that in my profession, I refused to lie, cheat or steal and I being state regulated turned in anyone who broke regulations if they did not immediately mend their ways or leave the place where I was working. I was professional and good enough at my job that I didn't need to do anything sleazy. I've sent people who held masters licenses longer than I had been in the business down the road. I policed my industry as the state mandated. The penalty for not policing my industry was loss of license, fines and possible jail time. I take your point Mike that there are bad apples in every profession, the difference is what the others in that profession do about them. You were the one who likened minerals to fries. I was just giving you an opportunity to show you believed in what you said, which you obviously didn't. It kind of sounded as though were you were trying to belittle someones ownership of a small amount of minerals, likening them to not getting your fries, and that didn't sound very mannerly to me. I would also like to ask you who I called a name ? I have been personally called names by oil professionals on this forum. If you would care to name one single person I called a name on this forum I would be more than happy to apologize. I love your equivocating that there are bad apples in all walks of life, the everybody does it excuse. Well, I don't. If someone accuses me of not telling the truth, I tell them that [1] they are not important enough for me to have to lie to them [2] that I tell the truth rigorously, that way I don't have to remember what I said, [3] that one day it may become necessary for me to lie when the really big one comes up, where I must be believed so I have gone decades telling the truth so that everyone I have ever dealt with will stand up and say I am telling the truth, that they have never known me to lie, but today is not that day of the really big one. I recently added a comment to one of Buddy Cotten's blogs where I said that to paraphrase, lease agents who attempt to get unknowledgeble mineral owners to execute and send them a lease they have no intention of paying for unless and until they can flip it for a profit, are "in my opinion, lower than pond scum". I will stand by that. I also do not consider it calling any specific person a name, although someone may think I have called them a name, but they would have to be claiming that description of themselves, that that is what they are knowingly doing. I have also said in these forums that if one does not wish to be despised, the greatest thing you can do to avoid it is to not do despicable things. A very good day to you sir.
Mike, I used to be in the commercial plumbing industry, schools, prisons, hotels, sporting arenas and stadiums. I am disabled with a bad back now. I guess since I have ten producing wells and two drilling right now and represent one other person in those wells you could call me an oil man, that I have made it my business, and that I will not tolerate garbage in this business any more than I did in commercial plumbing. I guess now I am badmouthing my own industry, again. At least I'm consistent.