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A lot of times these blind offers are for the entire tract/Unit. For example, it is one section, 640 acres and the offer is for the full 640 acres and in the small print it will say subject to title verification, etc. the price will be adjusted based upon what is actually owned.

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Could be correct. My uncle who owns the same % as mom, got the same offer, apparently for his third.

We build ASME pressure vessel packages and our main customers are in the Permian. I don't know specifically what's pushing what you're seeing but we've never been busier. (Around since 2008)

CanyonAg77 said:

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Thanks to you and others who have sent PMs.

I don't think she is inclined to sell. Partially because she is in excellent financial shape, partially because she doesn't want to mess with it, and last, she would rather pass it down to family.

This is the company making the incredible offer, BTW:

https://www.eprenergy.com/

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It's just weird to me seeing this company with 8 employees all looking like they are in their 20s to 30s offering nearly 8 figures unsolicited for 300 acres. It just doesn't seem right but oils and gas is not my wheelhouse so maybe that's the norm.

CanyonAg77 said:

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Thanks to you and others who have sent PMs.

I don't think she is inclined to sell. Partially because she is in excellent financial shape, partially because she doesn't want to mess with it, and last, she would rather pass it down to family.

This is the company making the incredible offer, BTW:

https://www.eprenergy.com/

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100% these guys are throwing out big offers to get in contact and then will pull the bait and switch and offer much less

I don't believe 50 times.

All depends. If the offer is based on 640 acres at 100% vs. the ~300 at 5%.

Ten figures on 640 doesn't seem totally out of the question, especially if they are buying vs leasing.

There is a microscopic chance that it's truly 30X the yearly production.

If so, it's because there is a rig on location. Even with a rig, then it's 30X because an old stripper well is holding it and the current checks are tiny. A new lateral or four would make 30X a good deal for royalty buyer.

In all likelihood, it's the very small print. It will say something like "offer based on 25% royalty and you owning 8/8ths of minerals and royalties."

Then you sign the contract like a dummy. Royalty buyer writes a check for 3X yearly production and there is nothing you can do about it. That's because it's held by 1/8th lease (that cuts your check in half). And your relative has 4 siblings, each owning 1/5th of minerals and royalties. (that cuts your check by 80%)

sunchaser said:

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I don't believe 50 times.

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That's the offer.

The question is, is it a real offer for the correct percentage?

CanyonAg77 said:

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sunchaser said:

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I don't believe 50 times.

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That's the offer.

The question is, is it a real offer for the correct percentage?

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No, they have not spent any money on title work at this point, so they don't know what the ownership is. They send these letters off the mineral tax rolls.

They look like stereotypical TCU grad mineral/royalty flippers.

CanyonAg77 said:

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Thanks to you and others who have sent PMs.

I don't think she is inclined to sell. Partially because she is in excellent financial shape, partially because she doesn't want to mess with it, and last, she would rather pass it down to family.

This is the company making the incredible offer, BTW:

https://www.eprenergy.com/

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I worked with/for Teddy for a short while a few years back. I could get some questions answered if she wants to seriously consider this offer.

And yes, they almost certainly just used the tax rolls to estimate ownership, and made an offer off of that.

If they are offering 30-50x, it means someone is about to drill and your mom doesn't know about it.....

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In all likelihood, it's the very small print. It will say something like "offer based on 25% royalty and you owning 8/8ths of minerals and royalties."

Then you sign the contract like a dummy. Royalty buyer writes a check for 3X yearly production and there is nothing you can do about it. That's because it's held by 1/8th lease (that cuts your check in half). And your relative has 4 siblings, each owning 1/5th of minerals and royalties. (that cuts your check by 80%)

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I'm beginning to believe that this is the scenario.

I may need some vessels later this year. Texags discount on code vessels?

I'll do what I can

Send a PM to Comeby. He's a CEO of an oil company in Dallas and a board member of the Society of Petroleum Engineers.

Small update:

Someone PM'ed me for the legal description. I don't have the papers in front of me, but I took a pic of the legal description. As I replied to the PM, I noticed that the legal description said:

All of section 42....

All of section 37...

Mom has mineral rights on each of those sections. She has maybe 300-400 acres total (don't recall the numbers) and her share of the rights is about 1/6 of the total.

If the amazing amount of money they are offering is for all of two sections of mineral rights, then the offer is equal to about $500 an acre.

I think we're finding the 'bait and switch'.

It surprising, unfortunately. That's what these guys do and people will sign and return without even doing any diligence like yourself.

CanyonAg77 said:

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Small update:

Someone PM'ed me for the legal description. I don't have the papers in front of me, but I took a pic of the legal description. As I replied to the PM, I noticed that the legal description said:

All of section 42....

All of section 37...

Mom has mineral rights on each of those sections. She has maybe 300-400 acres total (don't recall the numbers) and her share of the rights is about 1/6 of the total.

If the amazing amount of money they are offering is for all of two sections of mineral rights, then the offer is equal to about $500 an acre.

I think we're finding the 'bait and switch'.

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Just send it back to them leaving the price the same but for half of what she actually owns and see if they sign it. Turn about is fair play.

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I worked with/for Teddy for a short while a few years back. I could get some questions answered if she wants to seriously consider this offer.

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We're 99.9999999% planning to trash it.

If I understand the way the deal is presented, it seems like a pretty scummy approach to buying mineral rights.

Nothing wrong with offering money, but to make it appear you're offering high six figures when you really only intend to pay low 5 figures, seems unethical.

If I am wrong, I will gladly apologize on this thread.

You aren't wrong at all. It's ****ty and I hate those guys. It's why Landmen get a bad wrap.

First off, I am in the mineral business and am actively working with individuals and deal guys in the permian. We compete and see deals from EPR. I don't know the specifics of the offer or how it was presented. I do know that verifying mineral ownership can be simple or very complex. Most companies do not want to spend weeks verifying ownership unless they know they have someone that is interested in selling.

Canyon, Thanks for surfacing the issue that caused many of our antenna's to go up immediately.

Over the decades I have received Division of interest letters.When a company changes the oil buyer you will get a DoI letter from the new purchaser. It will usually be one page with the property name etc and a blank to write in your royalty interest 1/8 etc and sign and usually witnessed by one or two people.

About two or so years ago I had a class mate ask me to look at a letter from an "Operator" in Oklahoma. It implied that it was a Division of Interest letter. She had about 40 properties with extremely small fractional interests amounting to maybe $100 or so per year. All of it went into a college fund for her grand daughter.My first thought was why is an Operator sending her a DoI letter. They have a split deck and know the numbers for WI&RI ...

I wish I had kept a copy. This one was at least three pages and it was from the Operator.It talked about a well to be drilled and the associated cost to drill and several different boxes she could check and become a working interest owner at different percentages.

It also had boxes relative to royalty interest with a bonus and a lot of wording.....$1000 & 1/8, $500 & 1/4 etc.

None of it made any sense to me and after messing with it for several days I sent the letter to one of my sons and asked, "What the hell is this?"

He replied, "The craftiest letter I have seen, if she checks any of the royalty boxes she conveys her interest to the operator."

All of that for $100 or so.....

sunchaser said:

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Canyon, Thanks for surfacing the issue that caused many of our antenna's to go up immediately.

Over the decades I have received Division of interest letters.When a company changes the oil buyer you will get a DoI letter from the new purchaser. It will usually be one page with the property name etc and a blank to write in your royalty interest 1/8 etc and sign and usually witnessed by one or two people.

About two or so years ago I had a class mate ask me to look at a letter from an "Operator" in Oklahoma. It implied that it was a Division of Interest letter. She had about 40 properties with extremely small fractional interests amounting to maybe $100 or so per year. All of it went into a college fund for her grand daughter.My first thought was why is an Operator sending her a DoI letter. They have a split deck and know the numbers for WI&RI ...

I wish I had kept a copy. This one was at least three pages and it was from the Operator.It talked about a well to be drilled and the associated cost to drill and several different boxes she could check and become a working interest owner at different percentages.

It also had boxes relative to royalty interest with a bonus and a lot of wording.....$1000 & 1/8, $500 & 1/4 etc.

None of it made any sense to me and after messing with it for several days I sent the letter to one of my sons and asked, "What the hell is this?"

He replied, "The craftiest letter I have seen, if she checks any of the royalty boxes she conveys her interest to the operator."

All of that for $100 or so.....

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There was a scandal going around a few years for something similar. People would get a document title "oil and gas royalty lease," but the actual language of the document would convey one's mineral interest. Sketchy *****