Expert: Bob Von Rhee
Date: 1/10/2008
Subject: Marketing mineral rights
Question
My grandfather sold the family's 75 acre farm in Hood County Texas in the early 1950's and retained half the mineral rights. I have a copy of the deed of trust which details the transaction. I know that the property is located in the Barnett Shale and potentially has substantial value. Upon my grandfather's death, all his assets passed to my grandmother and on her death to my mother, who is their only child. My mother is now 84 years old and neither she nor I have any expertise in how to pursue marketing these mineral rights. Can you advise me regarding whom to contact initially? Should I pay a Hood County title company to research and prepare a report regarding to whom the property currently belongs and whether there's a lease in place? Or should I consult a local attorney in Hood County who specializes in oil and gas, or should I directly contact one of the production companies (such as Chesapeake Energy) who are active in the area? Any direction you can offer on how to proceed will be appreciated.
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Answer
Joe. I am not an expert in how to market Barnett Shale minerals, however, I can suggest at least one starting point. That would be to speak to "EnergyNet.com" at that same web address. They are an internet oil and gas auction company - a very similar way of listing and selling to the "e-bay" concept. At there home page you should be able to find the contact info for the representative for your region. They will assess a fee for listing your minerals, but the company was founded by oil industry professionals for industry professionals and you can be sure to be treated fairly. Your idea of speaking to your local attorney is also good as you may learn much about the local market - if the attorney is involved in Oil and Gas. The shale play minerals are selling for large multiples above a normal net acre lease bonus. I am aware of one attorney in Ada, Oklahoma who has begun a local auction specializing in Woodford Shale minerals since that play has taken off in southern and southeastern Oklahoma. If you contact a company directly like Chesapeake you will probably get an offer, but it may not be the best offer since there will not be any apparent competition. Oil and Gas interests like mineral rights are bought and sold very much similar to real estate. You seem to have a very good handle on title to the minerals, but it might behoove you to have a title attorney examine your title documents before you attempt to sell. This should help put you on a much firmer footing when you try and sell.
Anyway, ask lots of questions, be slow to sign any paperwork, and good luck. I'm sorry I'm not more of an expert in this area, but you are correct to proceed slowly and cautiously. By the way, it was in the paper today that Chesapeake has just taken another large position in the Barnett play by acquiring another small company. I don't see the interest in the Barnett decreasing anytime soon. Good luck
Hope this helps a little.
Bob VR
