Most mineral and royalty owners don’t get the opportunity to see what’s undertaken behind the scenes when we prepare to market assets to the buyer market. It’s a ton of information to gather, analyze, and present to buyers. Understanding the scope of work that Venergy takes on to achieve the high success rate that we have with our clients is key to understanding how selling minerals and royalties actually works.
Stage 1: Information Collection
Not only do we need our clients to send us important documentation to help us understand their assets, but a lot of the time they don’t have the critical documents we need so we have to go on a treasure hunt to find it, thereby taking extra time and money to obtain them.
Here is a list of the most common and important documents we ALWAYS ask our clients for:
- Revenue Statements (from the past 3-6 months)
- Division Orders
- Current Lease(s)
- Title Documents, such as:
- Previous Deeds, Conveyances, and/or Assignments from past generations
- Last Will and Testaments and/or Trust Documents
Additionally, the information we seek is not always digitized so we may need to go to a county courthouse and comb through pages and pages of deeds and leases just to find the information we need to fill in any gaps. Depending on how many tracts of land, the amount of interest owned, and depending on where in the US the assets are located, this can be a daunting feat for anyone not versed in land and title research.
Stage 2: Research, then Research More
Once we have the information needed, it’s time to start researching the title and gather a good understanding of what’s going on in the area where your interests are located. These are two separate and very important tasks that can take considerable time and effort since typically obtaining this information requires us to use even more information sources. You need to know how to read oil and natural gas maps, GIS software, and know what to look for when reading assignments, leases, conveyances, deeds, and much more. You also need to know how to calculate Net Mineral Acres, Net Royalty Acres, and Division of Interest, and what these terms mean.
Stage 3: Pull It All Together
Once we have a good idea of what you own, where, and how much, it’s only then when we can put this information into a presentation for our buyer market. Some of the information we gather and present includes:
- Maps/plats of the acreage and where it is, the state and county and/or parish
- Interest Type: Fee Mineral/Royalty, Overriding Royalty (ORRI), Non-Op Working Interest
- How much acreage: Gross Acres, Net Mineral Acres, Net Royalty Acres
- Current operator(s)
- Lease royalty percentage
- Property description(s)
- Well list of all producing wells affecting a seller’s interest
- Unit plats showing how the seller’s interest is unitized, and much more.
Professionalism and Organization Matters
I can’t tell you how many times I’ve seen others try to sell a deal without including all the information buyers need and the buyers say, “Since I don’t really know what is for sale, we can’t spend the time right now evaluating it, we’re too busy.”
There are many advantages to providing a full-scale presentation with the right information and due diligence work already done in an easy-to-read format for our buyers:
- Allows them the ability to decide within 5 minutes if this is a deal they want to spend time diving into
- It exponentially increases the odds of having more eyes on your deal in a much shorter time frame
- It puts us in a strong negotiating position to obtain a higher sale price when all the information is laid out factually
- It shows buyers that we know what we’re doing, that we put in the time and expense to ensure we know the deal and the potential of it
- It shows professionalism and that we know our business
At Venergy, we know what buyers want to see and what questions they will ask, which is why we gather all this information PRIOR to marketing. In many instances, we find out that interest owners sometimes own more, and sometimes less, than what they think because we dig deep to understand their assets. It may take a little longer to get to the next stage of marketing, but it’s only because we make it our practice to do extensive due diligence beforehand.
Stage 4: Who You Know Matters
Not only is the quality and accuracy of the information within the presentation important, it’s equally important to know who to contact at this stage. Having a good buyer network and close relationships with them is key to a successful outcome for all parties. We only deal with end buyers, no brokers, meaning those who have the funds to get the deal done. We don’t work with deal flippers and cagey industry middle-men. Doing so would take funds from the ultimate sale price, meaning, our clients! To learn more about this, be sure to check out our blog on working with brokers, Shhhh…Personal Advice from a Landman.
Stage 5: Lead and Negotiate the Sale
This is where the fun begins and where we consistently receive confirmation of our two reasons why testing the buyer market really works to obtain your current mineral rights value.
- Mineral and royalty buyers value assets differently
- Something is only worth what someone is willing to pay for it
If you missed our article, Testing the Buyer Market to See How Much Your Minerals are Worth – Does it Work? you can check it out here.
When we start to receive offers, it’s fun to see the range of offers we do get, and because our buyers know who we are and that we advocate for our clients, we receive solid offers that cut out a lot of time and back and forth. We can answer their questions with ease since we know the ins and outs of your assets and have spent the time and effort to understand it thoroughly and put it together professionally.
The Keys to Success
Obtaining fair, high-value mineral rights sale offers is largely dependent on:
1) The due diligence done prior to marketing, and
2) The quality of the buyers the asset is presented to
As stated, oftentimes we run across many gaps, including money held in suspense for our clients that we help them recover along the way. Due to surprise discoveries like this, our service ends up providing more value to our clients.
It’s important for us to manage expectations for our clients and to help them be aware that the preparation we need for our buyers to purchase mineral rights can take a considerable amount of time, but we believe in quality and getting it done right the first time.
If you want to talk about selling mineral rights value, mineral prices, and mineral rights royalties, schedule a complimentary consultation today.
For more details about our services and to explore our FAQ, visit Venergy Momentum. We have an A+ BBB rating and 5-star Google reviews.
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