I have a royalty interest in Howard County Texas that has two wells currently producing oil and gas. I receive offers all the time in the mail for either one of them or both. I keep the ones that have prices quoted for whatever the buyer is interested. I recently received an off on one of the wells that’s almost five times the highest I’ve ever received. I’m thinking about calling the well operator to see if they have any information or opinion about the offer but I don’t know if that’s a proper thing to ask them or if it’s a no-no. Any advice appreciated since I’m obviously a neophyte in the oil royalties arena.
An operator will not disclose proprietary information and research about plans it is considering as that could give others the opportunity to jump in and grab some of the action. Nor will they give you an analysis of an offer as that could lead you to claim you got bad advice and lost money by either selling or holding on to your minerals. You can look at fling of permits and spudding of wells around your minerals by reviewing data on the RRC website. if you post the legal description or the wells, then someone familiar with Howard County can help you.
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Don’t think the operator is the best one to get an opinion from. They might be interested in buying you out and offer you just a bit more to induce you to sell.
When you say 5X the highest you received are you referring to monthly or annually? Monthly would be a bad deal, yearly may be closer to value.
The nice part of not selling is they payments go on as long as the welll is active. Many wells produce for decades and with more modern extraction can produce more longer. The income from my minerals has produced a good supplement to my retirement since I inherited them. If you decide you want to sell, someone here with more experience may suggestions on how to solicit offers from multiple buyers.
Take your time to make your decision. Best wishes
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Actually the 5x offer was referring to it was 5x of the biggest offer I’d ever received for that particular well. As far as times the production, looking at my statements attached to my monthly checks the offer appears to be somewhere around 60x the annual amount it throws off.
The only reason I consider selling if because I’m concerned about how to leave the royalties to my heirs. They throw off a nice addition to my other sources of income but it’d get really small when divided again among my kids and a pain to reregister with counties, etc.
Not sure about what I’ll do but this offer was so much greater than anything I’d ever seen it made me curious as to why he’d make that generous of an amount.