United Energy out of OKC


#1

Has anyone heard of a United Energy out of OKC? Someone called from there leaving a message, I called back and am asked to leave a message. Curious if these guys are players, pretenders, or neither.


#2

There are about ten United Energy xxx companies in OKC. Did they have Group, Partnes, LLC, or more to their name?


#3

I am not sure which one it was. They called back. Was interested in buying my minerals but wasn’t that interested when he learned I knew about the Project Springboard.


#4

Definitely don’t want to sell if you are in that project.


#5

Yes. I was only interested in getting an evaluation. Not because I want to sell or borrow against, just curious the valuation people in the energy business interested in Grady County minerals would value them.


#6

Or, depending on their individual situation, appetite for risk, or the amount of the offer, consider selling…Come on Martha, where’s the caveat!?

Blanket ‘definitely don’t sell response’ are as dangerous as selling blindly without having a solid grasp of the situation.


#7

Jeff,

There are so many carpet baggers trying to purchase minerals in this area for a song based on the fact the minerals have been handed down to people who may have never lived in the area, don’t know much about how minerals work, didn’t know minerals have their own deed, etc. therefore may be slightly ignorant of the true value and/or the long-term value and so they sell them far below their intrinsic value. This is why Martha doesn’t provide a caveat.

If you want to purchase, everything has a price so start the bidding. The educated mineral owner is going to expect a price that reflects the activity and the prospects for the future.


#8

Let me rephrase, I would not want to sell if I were in the Springboard area.

Yes, there are times when a family would decide to sell (maybe just part) if they had great need and were fully informed of their actual present and future potential value, had a knowledgeable attorney and accountant and an aggressive marketing effort with legitimate companies who will pay a reasonable value (willing and informed buyer and willing and informed seller) on time.


#9

I fully understand there are many low-ball bidders out there, I think there are multiple types of bidders out there. I fully agree and encourage buyers to arm themselves with as much information as possible. But as Martha and I have discussed on many occasions, blanket statements are dangerous. Every mineral owner is in a different position financially, or even emotionally than the next.

Martha is in an extremely fortunate position of owning a broad array of minerals spread over a wide area as compared to most mineral owners who only own a single asset. This alone creates a concentration risk, and I think many times that people, don’t truly consider all the risks when stating “don’t ever sell”, equally as much as those on the opposite side saying to “sell everything”. No single position is correct, and no single position is the same for everyone as situations vary from person to person.

Having a huge amount of value tied up and concentrated into a single asset may not be the best decision for most people’s financial security. However, taking any bid without being informed is as poor of a decision that an owner can make…

As we all recognize, there are many factors that go into valuation and prices, some are driven by external forces, such as prices, geology, operator (are they good at what they do, are they crooks, etc.) and some are driven by internal forces (medical bills, desires to diversify, tax and estate planning, etc.).

I also don’t disagree with Martha that if you can hold onto your minerals you will almost always generate more cash than if you sell them - buyers are investors and expect a return on their investments. With that said, as competition has increased across the various basins, including the mid-con, expected returns have been driven down significantly and the need for investors to be more aggressive with their assumptions, and hence take on greater risks have increased tremendous. Some of these mineral deals are very mispriced and will result in low single digit IRR’s, if not actual cash losses on investments.

And while I agree with the majority of the posts on this blog about educating oneself, I completely disagree with the notion that simply looking at operator’s presentations will provide enough insight to make a fair assessment of your acreage’s value. Operators are generally full of S*@#. If their presentations were 100% accurate, they wouldn’t have safe harbor statements in them. Further, all well results would look like operators’ type curves ever time. Well (pun intended), well results don’t reflect type curves, and most don’t even come close. They are essentially the production profiles assuming that everything goes right 100% of the time with ever well drilled - they are by definition hypothetical.

individuals need to assess their situation and decide if they are comfortable with counting on the operators being 100% correct every single time especially when they only own a single mineral asset.

They need to ask themselves:
What degree of variance are your willing to accept?
What are my alternative investment options?
What am I willing to trade off or leave on the table from a risk/return perspective to sell a portion of my minerals and diversify into other asset classes?

At the end of the day, minerals may be one component of a person’s portfolio of assets, but they probably shouldn’t be the only component of a person’s portfolio. That’s where blanket statements become as dangerous as accepting a bid thrown your way without educating yourself as to the options and various potentials, be it potential risks, potential returns, and the potential options (including diversification).

SO I do apologize to Martha, for my short, somewhat joking statement about ‘where’s the caveat’, and I think Martha is a wonderful person that provides a tremendous amount of help to many many many people on this website. I do however cringe, when I see blanket statements from her or anyone else on here. Mineral buyers are providing a service, and a mineral owner that is considering selling should educate themselves as to what they have. There are plenty of buyers out there, and everyone is receiving dozens of offers - you see that mentioned all the time, so it’s pretty hard for me to swallow the idea that there’s not a competitive market for assets in the SCOOP/STACK at this point in time. And one should consider, if I sell my minerals for $15,000, or $25,000 or even $30,000 acre, am I really leaving much on the table, and can I reinvest that into stocks, bonds, real estate, or some other asset and generate a return greater than what I would earn if I simply held on and collect checks over time. It truly a valid question to think about, and something that everyone should evaluate when they are reviewing offers. . In summary, don’t sell if it’s not a good offer, or if you don’t have any alternatives to reinvest at a higher rate, or don’t need the money, and consider selling if the rate of return on alternative assets exceeds the return of what you would earn by keeping your minerals.

At some point in time, ever bubble bursts, and some of the valuations thrown around out there remind me of bubbles.


#10

Good answer!


#11

thank you my friend. Are you coming to the NARO conference up here?


#12

I am at TX NARO right now. Not sure about Denver, but thinking about it. National is always a good meeting. Denver in October is glorious!


#13

it will be a bit cooler then…dear oh dear its been hot.

I’m sure I’ll see ya if your here.