Offer to purchase mineral rights

[REWahoo]

Anyone know anything about how to evaluate the legitimacy of an unsolicited offer to purchase inherited fractional oil and gas rights?

A few days ago DW got a phone call from someone offering to purchase the mineral rights (oil and gas) he says she owns in some land in Pennsylvania. Her brother got a similar call that same day. Neither of them had any knowledge of owning these rights and the individual on the phone explained he'd spent considerable time and effort tracking down the heirs to this property in an effort to buy and consolidate the rights.

The caller sent a legal document (deed) for her to sign and get notarized. Alarm bells, already faintly ringing in the background, hit full volume when I saw where the document states she is conveying all rights for the sum of One Dollar ($1.00) in one paragraph and later in another paragraph states "The actual consideration for this conveyance is $XX,XXX", which is $1,000 less than he told DW and her brother on the phone he would pay each of them for the rights. Fishy.

Obviously she isn't going to do anything without letting an attorney look at it first, but I was curious if anyone here had any experience in this area and could offer some advise on how to proceed.

 

[copyright1997reloaded]

Get an attorney.

However, rights for fracking (horizontal drilling) are a big deal in PA these days. Quite a few farmers have made fairly big numbers on these.

 

[copyright1997reloaded]

Interesting read regarding drilling deals: https://www.npr.org/2018/03/15/592890524/millions-own-gas-and-oil-under-their-land-heres-why-only-some-strike-it-rich

 

[ExFlyBoy5]

Anyone know anything about how to evaluate the legitimacy of an unsolicited offer to purchase inherited fractional oil and gas rights?

A few days ago DW got a phone call from someone offering to purchase the mineral rights (oil and gas) he says she owns in some land in Pennsylvania. Her brother got a similar call that same day. Neither of them had any knowledge of owning these rights and the individual on the phone explained he'd spent considerable time and effort tracking down the heirs to this property in an effort to buy and consolidate the rights.

The caller sent a legal document (deed) for her to sign and get notarized. Alarm bells, already faintly ringing in the background, hit full volume when I saw where the document states she is conveying all rights for the sum of One Dollar ($1.00) in one paragraph and later in another paragraph states "The actual consideration for this conveyance is $XX,XXX", which is $1,000 less than he told DW and her brother on the phone he would pay each of them for the rights. Fishy.

Obviously she isn't going to do anything without letting an attorney look at it first, but I was curious if anyone here had any experience in this area and could offer some advise on how to proceed.

These can be (and usually are) complex deals and it would suit you well to contact an attorney that deals in this kinda thing. Since you are in Texas, it shouldn't be too hard.

 

[dtbach]

Hope it all works out alright. Fracking in Penn. is very deep and horizontal so it would like getting free money with no adverse affects on your land.

 

[W2R]

Caveat: I know absolutely NOTHING about this, nada, zero, zip.

That said, I'd regard five figures coming out of the clear blue sky as manna from heaven. If it were me, I'd jump on it ASAP; and as soon as it hits the bank, I'd be seriously blowing that dough! Parties? Booze? Trips? Vehicles? Whatever floats your boat.

That's how I would proceed....

 

[Dare]

Definitely contact a lawyer with expertise in mineral rights. You might do much better by leasing the rights instead of selling. You might be able to get a signing bonus, plus some ongoing income. I'd look at this offer as notice that there is activity in the area and this is a good time to investigate your options. I would NOT rush to accept this first offer without doing your research.

 

[street]

Get an attorney but if were me I wouldn't sell my oil/gas rights. Keep them for your heirs if nothing else. Trust me don't sell!

 

[OldShooter]

Caveat: I know absolutely NOTHING about this, nada, zero, zip.

That said, I'd regard five figures coming out of the clear blue sky as manna from heaven. If it were me, I'd jump on it ASAP; and as soon as it hits the bank, I'd be seriously blowing that dough! Parties? Booze? Trips? Vehicles? Whatever floats your boat.

That's how I would proceed....

That's what the buyer is hoping for.

Do you think the buyer would tip his hand in the initial letter and offer his maximum price? (Hint: "No.") Do you think the buyer wants the seller(s) to get excited and move quickly? (Hint: "Yes.") Do you think the buyer's timeframe is more urgent than the seller's? (Hint: "Yes.")

Slow and deliberative gets the job done, together with research and expert help. He who is in a hurry loses and the seller here has no urgency at all. The oil is not going anwhere.

Example: In our state, deeds are recorded as public records and I think this is universal. This means that if the buyer is actively buying, there are already-recorded deeds that will make very interesting reading.

 

[street]

Don't sell for what ever money they offer you, DON'T SELL!

 

[cathy63]

A few days ago DW got a phone call from someone offering to purchase the mineral rights (oil and gas) he says she owns in some land in Pennsylvania. Her brother got a similar call that same day. Neither of them had any knowledge of owning these rights and the individual on the phone explained he'd spent considerable time and effort tracking down the heirs to this property in an effort to buy and consolidate the rights.

She and her brother own the mineral rights, but they don't own the surface land? So who does own the surface land (who's been paying the property tax), and how and when did the mineral rights get separated from the land ownership? From whom did she inherit these mineral rights?

You don't have to answer here, but I would think your DW would at least want answers to these questions and some kind of proof that she actually owns these rights before she would even consider selling them.

 

[REWahoo]

She and her brother own the mineral rights, but they don't own the surface land?

No, they don't own the land and were informed they each owned a fractional share of the mineral rights to a 200 acre parcel of land. The company that contacted them sent a "flow chart" showing the history of the mineral rights as they were inherited through five (?) generations. No information on who owns the land itself but I'm not sure that's pertinent to this discussion.

 

[RAE]

No, they don't own the land and were informed they each owned a fractional share of the mineral rights to a 200 acre parcel of land. The company that contacted them sent a "flow chart" showing the history of the mineral rights as they were inherited through five (?) generations. No information on who owns the land itself but I'm not sure that's pertinent to this discussion.

Well, they might want to talk to the owner(s) of the surface land before they proceed any further. I dealt with oil/gas exploration in my job, and trust me, the drillers can do a LOT of damage to the surface land with any kind of subsurface drilling (including fracking). Parts of the Allegheny National Forest in Pennsylvania are a real mess now as a result of fracking operations. Once they get ownership of the mineral rights, the surface owner has little to no control over what happens to their land (the surface). The owners of the surface land in this case may have no idea that the mineral rights may be sold soon, and what that may mean for whatever they have on the land (house? farm? timber?). If I was the surface land owner, I would want to know that this is happening (and maybe I would want the chance to purchase the mineral rights myself, to prevent a drilling rig from showing up in my backyard one day.......)

 

[RAE]

She and her brother own the mineral rights, but they don't own the surface land? So who does own the surface land (who's been paying the property tax), and how and when did the mineral rights get separated from the land ownership? From whom did she inherit these mineral rights?

You don't have to answer here, but I would think your DW would at least want answers to these questions and some kind of proof that she actually owns these rights before she would even consider selling them.

+1. If I were in your DW's shoes, I would also want answers to all of these questions before proceeding any further with this. Once you get the answers (in writing), then it may be time to talk to an attorney who is familiar with real estate law.

 

[copyright1997reloaded]

You might find this site interesting: https://www.usmineralexchange.com/ Disclaimer: I found this doing a search and some folks talking about it...I have no personal knowledge.

However, I have relatives in SW PA who have farms in the family, and I have heard them discuss mineral rights and fracking. I can ask them for some pointers....

 

[Ronstar]

Interesting. I've dealt with properties for years that did not include mineral rights (our Illinois home included). Lots of Illinois properties in former coal country were surface rights conveyed from the coal companies. The coal companies retained mineral rights in case they want to come back.

But I've never heard of anyone wanting to buy the mineral rights. Sounds like someone who really wants to clean up the title to the property. But who knows - maybe the mineral rights are worth big $.

I agree - get an attorney - and one that is close to the subject property. Someone familiar with the property and knows what is going on in the neighborhood.

 

[street]

Interesting. I've dealt with properties for years that did not include mineral rights (our Illinois home included). Lots of Illinois properties in former coal country were surface rights conveyed from the coal companies. The coal companies retained mineral rights in case they want to come back.
But I've never heard of anyone wanting to buy the mineral rights.
Sounds like someone who really wants to clean up the title to the property. But who knows - maybe the mineral rights are worth big $.

I agree - get an attorney - and one that is close to the subject property. Someone familiar with the property and knows what is going on in the neighborhood.

Very common in my part of the world. I had my old boss tell me about a month ago that an oil company wants to buy his mineral rights. He just laughed and yes he won't even call them back. It happens here all the time. Land is triple or greater in price if you can even get the minerals.

 

[Texas Proud]

The one thing I would do is contact the company that is doing the drilling... there might be money sitting there for the true owner....


As far as getting an offer, it happens off and on... my dad owned a small mineral right for gas in south Texas... very small... it was zero for many years but then got going again.. a few hundred here and there... then one or two years a few thousand... now back to small potatoes...


But, when we were getting the couple of thousand we got offers for the right for say $500... since it was not even a years worth of royalties we did not sell... now it is between $50 and $150 per year and we get none...


BTW, ours is in the Estate of my dad... who died in 1980... getting it into my name is going to take me a bit of work...

 

[REWahoo]

Though I'd post a follow up to this thread.

DW and BIL contacted an attorney who reviewed the documents and said all appeared to be on the up and up. They decided not to attempt to negotiate a better deal since this was found money and they didn't want the hassle. 10 days after signing the documents they each got a check - and when they deposited it were pleased that it didn't bounce.

 

[MichaelB]

Nice update. Found money is such a pleasure

 

[Sunset]

Though I'd post a follow up to this thread.

DW and BIL contacted an attorney who reviewed the documents and said all appeared to be on the up and up. They decided not to attempt to negotiate a better deal since this was found money and they didn't want the hassle. 10 days after signing the documents they each got a check - and when they deposited it were pleased that it didn't bounce.

Nice, especially since they didn't even know about it.

I know a fellow who did this tracking down of rights for years for companies, the reality is sometimes someone owns the rights and you cannot contact them. If they collect the rights of lots of surrounding folks, then they just drill anyhow. Reality is the owner doesn't know, and even if they hear about it and realize they own the rights, they will do nothing, or settle by selling off their rights.