Expert: Frederick M. - 6/9/2009

Question
I have an elderly neighbor who has received an offer to purchase her land and mineral and royalty interests in Section 19, Twnshp 09N, Range 18E, Haskell County, Oklahoma.  It is a total of 40 acres. How can a person judge the reasonableness of the offer? She was offered $20,000. The offer came from Cobra Petroleum Company of Ft. Worth Texas. She is currently leasing the property to another company (oil and gas lease) and that lease expires June 9, 2009. That lease paid a flat $3,000 lease for three years with a 3/16th royalty in the event of production. I do not know if that company has done any drilling or exploration, but my neighbor has not received any royalty checks. Thank you for your time.


Answer
Richard, I would always advise people who are selling their minerals to get MORE THAN ONE offer before agreeing to sell, especially if they are not familiar with the prices in their area. Only by getting offers from several unaffiliated buyers, can you determine the true market value of your minerals in my opinion.

Offers that come unsolicited in the mail as this one likely did are always suspect to me. They usually know something you do not and so are not offering top dollar. This is not always the case, but should be at least a "yellow flag" for her to try and find some other offers before agreeing to sell.

I broker mineral deals fairly frequently, as you may have read in some of my other answers. Part of what I do is market people's minerals to SEVERAL or more buyers in order to ensure they sell for fair market value. This is what I'd advise her to do before agreeing to sell...get several buyers working on this. If she doesn't know any buyers, I could help find you (her) some. Write me at the below email. They probably would only be interested in the minerals however, and not the land.

If nothing else I would at least ask Cobra for their "best" offer before just agreeing to their first offer that came to her unsolicited.

Hope this helps you and her out.
Frederick M. Scott
scottminerals@aol.com