RECEIVING OFFER LETTERS
Have you received a letter in the mail offering cash for your mineral rights and oil and gas royalties? If you own mineral rights and oil and gas royalties in Texas, you probably receive multiple unsolicited letters every year from many different companies wanting to purchase your mineral rights and oil and gas royalties. The volume received can be frustrating and the decision on whom to contact can be daunting. While the letters may be an annoyance, receiving them could give you an idea what your minerals and royalties are worth. Comparing these letters allow you to see how your minerals and royalties have changed in value over time.
As you open your mail, many questions may arise. How do they know I have minerals and royalties? Is this offer really what my mineral and royalty interests are worth? Should I consider selling my oil and gas royalties and minerals? If I do want to sell, who should I sell them to? Let us answer some of those questions for you.
How do they know I have minerals and royalties?
In Texas, the owners of oil and gas royalties are part of public tax records. Each producing oil and gas well is appraised and each royalty owner is taxed for their individual interest. Many companies, including ours, use this information to calculate an original offer for your minerals and royalties. At Royalty Clearinghouse, we combine ownership information from county tax rolls with production data reported to the Railroad Commission to make our cursory bid. However, each state is a little different, so our process and bid calculations for each state depends on how their data is recorded.
How are my mineral rights or royalties evaluated?
Although the taxing entities and public oil and gas production data are great sources for the initial evaluation, the information is not always accurate or up to date. In some cases, we may estimate your royalty interests by using the lease filed at your county’s courthouse. Stubs allow us to confirm your ownership, verify the well data is correct, and allows us to give you an accurate offer.
We estimate the reserves of every well in Texas from the production volumes reported to the state. Understanding the reserves helps us to predict the cash flow that the minerals are expected to generate in the future.
In addition, the location of your interests, the drilling activity and productivity of the area, and the quality of the operator and field are considered when we assess the overall risk associated with the operation. The current and projected oil and gas prices also come into play. The ultimate offer we provide to you considers all these separate, but important factors.
Is this offer really what my mineral rights are worth?
The accuracy of our offer depends on several things. One source of error in our calculations is incorrect or incomplete information from the tax office. Another source could be from a newly drilled well that may not appear on tax records since they are updated only once a year. You may also own royalties across several counties or states, and it’s possible that not all of them were included in the offer. For this reason, Royalty Clearinghouse lists the individual interests that were used to calculate the offer on the second page of our letter.
Unfortunately, some companies lure a response from you with a large offer making it seem like your minerals and royalties are worth more than they are. Therefore, it is always a good idea to verify what minerals and royalties the offer covers.
Should I even consider selling my oil and gas royalties and mineral rights?
Selling your assets is a big decision, one that should not be taken lightly. Maybe your mineral rights have been in your family for generations. You may have an emotional attachment to them. Maybe you have difficulty selling because conventional wisdom tells you not to. All these reasons are valid, but circumstances are different for each person and for some, selling is the best option.
Our last blog post addresses this question in more detail.
If I want to sell, how do I choose who to sell to?
If you are wanting to sell your oil and gas royalties and mineral rights, it can be a difficult decision to decide which company to sell them to. Finding the right people to guide you through the sale of your mineral and royalty interests is critical to get the most value. At Royalty Clearinghouse, we understand how many questionable offers royalty owners receive, and that is why we put transparency and accountability at the foundation of our core values.
In our offer letter, we start by telling you who we are, so you know who you are contacting, and we explain why we are reaching out. Next, we tell you about our process and what you can expect when working with us.
We evaluate your property before sending out the letters, as we strive to provide the most accurate offer for your minerals and royalties. Therefore, we request check stubs before making a final offer to validate all the information used to make our initial offer. You can learn more about our process here.
When you do contact us, our team will thoroughly explain the options available for your unique situation with no obligation to sell. We encourage you to ask us questions because we want you to make an informed decision that you feel good about. Our goal is to help you determine the value of your assets and better understand the pros and cons of selling your mineral and royalties whether you choose to sell or not.