Straight Answer?


#21

There is not much difference between a quit claim and a special warranty. As you said, a special warranty only covers the time period you owned the interest. A general warranty will cover everything. I disagree on these corporate mineral buyers insisting on a general warranty. I get multiple offers every month. If I ever decided to sell, I would contact all of them and I believe at least one of them would accept a QCD. They will have conducted a title examination before paying. I would also warn people about forming an LLC and then quickly depleting it to avoid a demand by the buyer for repayment of all or part of a purchase price. The owner of the LLC needs to be very careful about not making it look like they defrauded the buyer. A creditor that thinks they were defrauded can file a claim against a bankrupt estate and then have it adjudicated. If the court did believe there was fraud, then it may also decide to pierce the corporate veil and allow the creditor to go against the individual. Whether a creditor is or is not successful, substantial legal fees could be incurred.


#22

It works out to a screwing if you take it, especially if you are under a lease. If you do not need the money, do NOT sell your minerals. That price will double in time. Be patient.

Tell me the legal (sec., Twp, Rng) and I will send you a map of whose doing/done/planning new wells. I am a retired geologist/geophysicist and worked the Permian Basin all my professional life.


#25

I agree. I am not a seller but I do understand some people may need the money now or their interests are too small to worry about. For me to sell, someone would have to make an offer that would be stupid for them to make and stupid for me to decline.


#26

I own 16.5 acres in Glasscock. I can sell this for 23K per acre. I just leased it for 5K/ac for 1 year.

People, wise up.Nobody buys something for what it is worth. High dollar short term leases. Make 'em drill or pay more later.


#27

Listen to Lee, the answer to his question is obvious.

A TON!


#28

Professional investors expect to make a profit? What a novel idea. I see a lot of offers that are worth more than present value of discounted cash flows. In a yield starved investment world, royalty interests serve as a great bond proxy for certain investment vehicles. Many buyers are agnostic of price due to the ultimate goal of securitization of the interest. Good luck forcing a drilling commitment with 16.5 acres. If you have been a professional geologist in the Permian- you would know that Glasscock (depending on area) has Lower Spraberry and WCA as viable targets at today’s strip. Everything else is way out of the money call options on higher prices. Don’t see much happening with the vertical Penn-age rock right now. People should consider their options independent of the “never sell” mentality. The Permian is way over-hyped and most of these companies are lucky to payout wells in 4 years (at all-in cost metric.) If the public funding ever drys up and/or if oil prices go back to $50- the party’s over for the privates and small caps. That said, know your area, know the operator (and their financial standing).

Also, NRA is a sematical term that has no real world application. If you own minerals under different producing units with differing royalty rates, you need to know the Net Revenue Interest under each unit. This is how all serious buyers determine a value. You can cross-reference the PV number with the number of NMA’s as a matter of practical evaluation technique but as a potential seller, I would avoid dealing with the term NRA. If you own a NPRI or ORRI this is valid but again- all DCA/DCF metrics are done with NRI.


#29

Knowing my geology, my partners, and my “players” is why this special case did work out. That was just my personal ownership in the tract in question, my partners had the majority mineral ownership. The “player” has the new offset producing vertical well, drilled on my work and information. They had to come back to the table.

Professional investors should and do make a profit. That is why I have been in this game for 50 years. The “public” funding craze is dumb money, but it spends and spends and spends. OPM makes the world go round.