Hello -
I am trying to learn about people's experiences/perceptions of using websites (ie Energynet.com, OGClearinghouse.com, etc.) or sophisticated royalty owners (ie Noble Royalties, Phillips Energy Partners, etc.) to sell their royalty interests and mineral rights.
Do you feel like you receive a good and fair price via these platforms and buyers?
Thank you - Jimmy
The only purpose to buy what you have is to make a profit off it, and they will do their best to do so. If you want to sell at a discount, rather than wait for the money to come anyway, it's your decision.
Thank you for the response, r w kennedy. I'm asking from the perspective of an individual who has already decided to sell. How are these websites and buyers perceived? Are the discounts egregious? Trying to understand whether it's worth exploring ways to decrease the bid/ask spread. Thanks again, Jimmy
I don't have any experience in selling. I will say that I have been in the market to purchase small interests of mineral rights in certain areas. Because of this, I have an account on EnergyNet. I have bid on a few properties and they have sold for more than I was willing to pay. I know there is a buyer’s fee there, but I don't know how what the sales commission fees are. There seems to be plenty of people willing to bid on the properties and the buyers are pre-qualified to a purchase amount limit. I had to provide contact info to my banker to verify my ability to pay.
Depending on the size of the properties and the interest in that area, I would check the local property records to see who has purchased rights. Then contact those as well as others that buy rights.
I agree with Mr. Kennedy that most are someone wanting to flip them for a quick profit. Doing your homework on the properties in your area should show you some clues as who the final purchasers are. Cut out the middleman if possible.
I have been observing sales in and activity for about a year or so. I’ve also been researching 60-70 years of documents on several hundred properties and what happened to other portions of the same properties I now manage for our family. Based on this, some points you may want to consider:
Take your time. The quicker you try to sell them, the more likely you are to leave money on the table.
Get all of your documentation in order. Documentation will vary by state. Many try to sell rights that lack clear documentation of the title history. In some cases the title is questionable. Deeds, Probate records, division orders, pay stubs, leases, and other documents help show clear title and amount owned.
Depending on the amount of money you are talking about, you might want to consult an attorney, consider using title research, and possibly an escrow (that you have verified as legit) service.
Research on the properties in the area may reveal some private mineral rights owners that own several properties in the area or even a percentage of the same property you have. One of these may be interested in acquiring more of an interest.
Compare offers from many sources. Let them know you are not in a hurry and will be contacting others to make an offer.
Do some research on activity in the area. Waiting may make the price go up (or down)
Beware of a potential buyer that tries to hurry you. Their offer may be a low-ball offer. They may know something about the area they don’t want you to know.
Good Luck!
Thanks so much for the thoughtful response, Mr. Howell. Ton of great info. Seems like an opportunity exists to create a disruptive platform that is a better solution for the seller.
Thank you for the offer, Mr. Tooke. I am not currently looking to hire a broker but I do very much appreciate the information.
If there are any other thoughts on current platforms such as EnergyNet.com and O&G Clearinghouse, I would love to hear them.
Thanks again -
Jimmy
Jimmy -
Just so you will understand, I would not be acting as a broker - just passing your information on to a few people that I know. There would not be anything in it for me, at least not that I am aware of at the present. And, if there ever were, I would never withhold that information from you.
My first advice to you, in fact, would be to NEVER sell your interests. And that, if some family or medical emergency dictates that you need to, then to only sell the minimum amount necessary for you to address your immediate issue(s).
The "load" going through organizations such as EnergyNet or O&G Clearing House would be substantial. Something along the lines of 10%. And your properties would a single entry or perhaps a small number of entries among thousands any potential Buyer would have to wade through to find anything they might consider bidding on and those bids will be the lowest they think they can get away with.
Working with individual Buyers / Investors directly, you eliminate all that.
Hope this helps -
Charles
I appreciate the response, Charles. That is helpful. I will reiterate that I am not interested at this time. But thank you for the offer. Separately, great points about current platforms. Thank you for that.
Still interested to hear others thoughts/experiences on current platforms. (I'm not considering using these platforms. I'm trying to educate myself.) Again, thank you.
Mr. stone the discounts are in my opinion egregious. As I said the buyer will be buying at a discount, discounting the productivity of the well/s in case production falls off faster than projected, discounting what the production of the well/s sells for because the prices do fluctuate. Then there is the discount to give the buyer a profit. I think you would be extremely lucky to get 70% of what you could realize in 5 years out of it and possibly only 70% of what you could realize from it in 3 years. At least now I hope you won't be shocked when you receive such offers. A private buyer could save you the listing price, just as selling your house yourself could save you the agency fees.
Jimmy Stone said:
Thank you for the response, r w kennedy. I'm asking from the perspective of an individual who has already decided to sell. How are these websites and buyers perceived? Are the discounts egregious? Trying to understand whether it's worth exploring ways to decrease the bid/ask spread. Thanks again, Jimmy
I'm not as familiar with the Mineral Rights Forum as I probably should be. How do I send you a private message? Can you send me one instead?
Kreg Harrison said:
Hey Charles - I might be interested in selling out Block C8/section 25 Reeves Co Tx. 25% interests on NE/4 161 acres - 40.25 mineral acres. Clear title - single heir. 2.2 years remaining on lease with CWEI. Ping me a private message and I will send you me email address
Charles
you need to 'friend' the person before the software will allow private messages. On their profile page there should be a button to request to 'friend', and they have to accept the request to complete it. Afterwards the private message feature will be enabled between the two of you.
Charles Emery Tooke III said:
I'm not as familiar with the Mineral Rights Forum as I probably should be. How do I send you a private message? Can you send me one instead?
Kreg Harrison said:Hey Charles - I might be interested in selling out Block C8/section 25 Reeves Co Tx. 25% interests on NE/4 161 acres - 40.25 mineral acres. Clear title - single heir. 2.2 years remaining on lease with CWEI. Ping me a private message and I will send you me email address
you should have a message from asking to be "friend"..check you messages pls..
I read where some here say the words "sell at a discount" or "don' ever sell" so I take it they then know what future production and future commodity prices will be as they'd have to know if they think that, but one can only guess at what they will be in the future. I would think Chesapeake would have been as good as anyone at predicting natural gas prices and now look at nat gas prices and where Chesapeake is at now. All these guys on here (most of which inherited what they have) can no more predict the future than the monkey in the zoo. I am certain that not one shorted natural gas when it was 600 percent higher than it is now so I wouldn't listen too much to their rhetoric. I have seen many times an individual pay more than others would be willing to pay but in general the more the merrier. I've seen people lose money on deals when they thought they got a good deal and others make money. A buyer of anything will try to make money (doesn't mean he will) or he'd be a fool. A few years ago minerals in Western North Dakota were worth little of nothing and minerals in Tarrant County Texas were worth more than gold, look at them now. I bid against a guy on some Hugoton a few years ago who bid a 20 year pay out on production, today just a few years later it would be a 100 year pay out (there's your discount). Don't listen to the guys that say don't sell and discount, they don't know what they are talking about unless they are psychic. Mercer county ND was worth a ton of money a couple years ago and if you listen to some that say never sell and you didn't sell, you were the biggest fool ever as they are worthless today. Just use common sense.
I think Joe and I have equally valid points, I lean towards having something of value underground and it seems Joe leans to having nothing underground. I guess it's up to each individual to determine if you have something underground. I will join Joe in saying that if your acres have no value, sell or lease and laugh all the way to the bank. Are your acres of no value ? What I got from the original question was that there was already production to be quantified. I think generally you have to have a royalty before you could sell a royalty interest, but that may just be me. Maybe someone, possibly me read the question wrong ?
Ps. Joe, you can mention me by name, I may not always agree with you but I consider you a friend, I have learned a great deal from you. Robert
RW, if I understood you correctly, yes you can buy and sell "Royalty interests" regardless of if there is any production. Obviously they'll bring more where there is existing production. Yet selling some "royalty" interest is is often done with undeveloped minerals.
As to Mr. Stone's question; The above comments are all valid. If the decision has been made to sell, then the auction companies mentioned are good ways to have your minerals shown to a very wide audience. Though I believe you might want to reconsider the offer above to show them to private investors to learn if there is interest and see if it's an attractive price. As to the auction route, I too have bid on properties I'm familiar with and have seen the bidding carry the price well beyond my threshold. Though I've no idea what commission the seller paid. So compare charges before jumping. Bottom line, show your minerals far and wide before selling.
Mineral Joe, "monkey in the zoo"! hahaha
All I can say is Hugoton and how people (as of today) lost tons of net worth even though they had "something underground". Chesapeake has tons "underground" and over the past 4 years have went from worth almost $70 to $15 today, how one can see that as making money I have no idea but the ones who sold maybe should be laughing at the others who lost over 75%.
r w I see you as a very valuable contributor here and I mean no disrespect to you, we just see things different on some things. I tend to live for the minute and I think your more into it for the life of it hence could be the major reason for our disagreements.
Joe, have they really lost net worth or has it just fluctuated ? Just because you can't sell it for the maximum price right now doesn't mean the price will always be low. There are still plenty of btu's in the grund, you only lose if you produce and sell in a bad market. After the government bailed out the savings and loans the government came into posession of alot of properties which it later sold and made more money than the bailout cost. There was still value there, it was just a bad market. The oil and gas companies did it to themselves in the short term by overproducing, if they can hold on to what they have I think they will find that natural gas will have greater value at some point in the next 10 to 20 years. I think our opinions may differ Joe, because you are earning a living from minerals right now and I am trying to get the most for the minerals and have said that I thought my point to sell/lease was probably in the next ten years, not that I had a choice, I have only one parcel of mineral rights yet undrilled of my nine parcels I started out with, and no I wouldn't want to hold up anyone elses production of their minerals before anybody asks. I will say Joe that if I were an oil and gas professional, buying, selling and leasing all the time I'm sure I would do well with your advice and you have taught me a great deal, but if you only have 1 property with mineral rights as I think the majority of mineral owners have, you have to make the most of what you have because there may not be a next time or next year to make a better deal. Thank you Mineral Joe for your contributions.
Mineral Joe said:
All I can say is Hugoton and how people (as of today) lost tons of net worth even though they had "something underground". Chesapeake has tons "underground" and over the past 4 years have went from worth almost $70 to $15 today, how one can see that as making money I have no idea but the ones who sold are laughing at the others who lost over 75%.
r w is a great and valuable contributor, we just see things different.
I have found Energynet very easy to deal with, both as a buyer and a seller or royalty interests. I have felt that properties often bring more than you would expect on Energynet. They attract a lot of bidding. Their internet bidding site is excellent. They usually have a pretty good assembly of information about properties for sale, such as recent checkstubs, production history, legal documents, etc.
OGClearinghouse is a different story. It is oriented much more towards working interests and large operators. They sell royalty interests only occasionally, and oftentimes they are thrown into larger lots with working interests. It is much more cumbersome to deal with and to conduct transactions unless you happen to live in Houston. This is much more of a traditional auction, scheduled on a semi-regular basis, where you may have to listen on the phone for a couple of hours for the property of interest to come up. You have to be prepared to do most of your own research.
I have no experience with Noble or Phillips.....
Thank so much, JW. Great color. Do you happen to know if you have to be an accredited investor to use Energynet's internet bidding site? Is the Energynet community mostly oil and gas industry types or are there other types of investors? Thanks again for the insight, Jimmy
JW Anderson said:
I have found Energynet very easy to deal with, both as a buyer and a seller or royalty interests. I have felt that properties often bring more than you would expect on Energynet. They attract a lot of bidding. Their internet bidding site is excellent. They usually have a pretty good assembly of information about properties for sale, such as recent checkstubs, production history, legal documents, etc.
OGClearinghouse is a different story. It is oriented much more towards working interests and large operators. They sell royalty interests only occasionally, and oftentimes they are thrown into larger lots with working interests. It is much more cumbersome to deal with and to conduct transactions unless you happen to live in Houston. This is much more of a traditional auction, scheduled on a semi-regular basis, where you may have to listen on the phone for a couple of hours for the property of interest to come up. You have to be prepared to do most of your own research.
I have no experience with Noble or Phillips.....