Petro drilling near my neighborhood, need advice

I've got a couple different registered letters I believe from the same company and I just tossed them before, but this packet seems pretty legit and offers $500 plus 17.5% royalty and a 5 year primary term.
they also offer the option to pay to invest in one or more wells or the third option is to be considered a non-consenting owner under rule 530, section 34-60-116, CRS and it says I would get 12.5% of production if any to my tiny interest in each well. .007752% to be exact.

my issue is I am planning on selling the house hopefully this summer and want to know how any of this would impact the sale, if it would be disclosed during the selling process, what about legal ramifications should the drilling company screw up and mess up the house or contaminate the water or something to the effect.

anybody deal with this before?

Presumably disclosed as wouldn't this transfer to the new owner of the property?

17.5% is on the low side for Colorado, at least it was 4 years ago. Try for 20%, leases were going 24-26% a couple of years ago at least in Weld and Larimer counties

What is the $500 for?

First are you sure you even own the mineral rights now?

I have no idea if I own the mineral rights. Not even sure where to find out if I do?

Yeah I expected to have no mineral rights since it was a big builder and I believe multiple builders owned the lots at different times which would make it even more susceptible to being stripped of the mineral rights.
The letter says I appear to own 51% of the mineral rights.

I got one recently for $168 and 15% from a middle man company as hbar described. First one was $5 and 10% a few years ago

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Originally Posted by USMC88-93

Presumably disclosed as wouldn't this transfer to the new owner of the property?

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Not unless the seller includes it with the house sale

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Originally Posted by UncleDave

17.5% is on the low side for Colorado, at least it was 4 years ago. Try for 20%, leases were going 24-26% a couple of years ago at least in Weld and Larimer counties

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Not anymore. 4 yrs ago The US was rocking O&G . By 2/1/16 some of the largest O&G producers, drillers etc will be shutting down, laying off and fairly sure stopping any orders for 2016-17.

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Originally Posted by sniper7

Yeah I expected to have no mineral rights since it was a big builder and I believe multiple builders owned the lots at different times which would make it even more susceptible to being stripped of the mineral rights.
The letter says I appear to own 51% of the mineral rights.

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Yes you do. If i were you. I'd sign, wait the 4-6 weeks till you get the bonus check and call it good. If you or anyone doesn't respond to the 2-3 ;etters you'll receive. Your share goes in to a general pool. That means what ever the general pool is being paid, if anything. Is what you will receive, If you don't sign.

We have O&G and water rights in town. The drilling that was suppose to happen, isn't. Or will any more drilling happen for the next year or 2. Maybe more. That bonus $$ was put toward the mortgage.

I have a copy of our contract an atty did some adjustments on prior to signing. You're welcome to browse it making changes to your contract as necessary.



Hear that sound? it was the housing market imploding. Hope those hipster old town ft fun home owners have a nest egg saved. cause it's about hatch.

Well, I can touch bases on this topic a little, but I don't own mineral rights in Colorado. However, I do own mineral rights in North Dakota where all the boom was going off. Three wells to be specific. One of my uncles has twelve wells on just one of his that he owns the mineral rights.

First off, never sell the mineral rights. I am actually surprised you have them and a developer didn't keep them for himself or sell them off. The company is just feeling you out. I have had several offers and I decline every time. These are worth some money.

Second, open up a family/oil trust fund. Make sure you get a tax ID number and don't use your SS number. Trust me on that one.
- Declaration of Trust
- Have living will with all paperwork
- Have mineral Deed with all paperwork
- Power of Attorney (general), Medical Power of Attorney

You should consult a good tax accountant. It is expensive, but so worth it.

Once you start, you will get the company investment monthly dividend and what was deposited into your trust. Keep good records of all expenses. I cannot express finding a firm that has a buttload of experience in trust funds and how to write them.

I posted a picture of two of my wells. This is not to brag, but to inform. I covered up all my information, but as you can see what gross/net came from the wells. This is where you get your cut depending on what percentage you get.

Some me people go buck wild when they start seeing this cash flow, but I would just leave it in the trust unless you really need it. I most likely will never touch this money. I paid for both of my parents cancer treatments/surgery without issue. One less thing to worry about.

When you see gas prices at 2.75 or more, life is good.

When you see gas prices at 2.75 or more, life is good

You probably see more return as the wells are on the property. Here they're 1+ miles outside town.
I know folks who have wells on property and just a % of( rentals around town) larger area. There's considerable difference return wise between them.

But of course. When crude is 27.00 a barrel, the wells are not in production. Now when crude is at 140.00 a barrel, those wells never stop producing unless maintenance is needed. Right meow, the wells are not in production. You can buy a really nice diesel F-350 truck in ND right now due to the oil production crash and people going crazy with money, spending like it grows on trees.

Like you stated, a different situation all together for sure.

Good advice tj but for those of us who only own less than one acre it'd take 20 years just to recover the start up costs of the documents prepared by a lawyer.

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Originally Posted by Wulf202

Good advice tj but for those of us who only own less than one acre it'd take 20 years just to recover the start up costs of the documents prepared by a lawyer.

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If you don't mind me asking, what kind of start up costs are you looking at? Lawyer wise...

Not really how much acres you have, more so how the well produces. I have one well that is an embarrassment. Not sure it even barely produces enough to pay the electric bill for the pump.

Last time i did a personal living will it was $400. Trusts are going to be 200 ish? Review of the lease a min of $100.

I own 0.11 acres...

After talking to Jim I think I'll just sell it and call it good. See if I can exclude the mineral rights in the sale of the house and keep the money coming if it is worth while.

quick question, though, I thought of calling them and asking for 20-22% and maybe a bigger signing bonus. Has anybody done that successfully?

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Originally Posted by Wulf202

Last time i did a personal living will it was $400. Trusts are going to be 200 ish? Review of the lease a min of $100.

I own 0.11 acres...

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We differ in price a bit, but that depends on what all that is included and detailed. My personal living will/trust was 1600.00. Now the oil/mineral right trust was 800.00 (and that was just a re-due cost of the original since it was more screwed up than a football bat). It is hard to estimate a cost for trusts. It is like having a gun trust. You can get a basic one for someone that needs something like that for 150.00 starting cost. Now I could be off base, but there are some serious collectors/enthusiast on this forum that probably would not have a 150.00 trust cost for having thousands of dollars in collectible weapons.

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Originally Posted by sniper7

After talking to Jim I think I'll just sell it and call it good. See if I can exclude the mineral rights in the sale of the house and keep the money coming if it is worth while.

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Smart decision.

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Originally Posted by sniper7

After talking to Jim I think I'll just sell it and call it good. See if I can exclude the mineral rights in the sale of the house and keep the money coming if it is worth while.

quick question, though, I thought of calling them and asking for 20-22% and maybe a bigger signing bonus. Has anybody done that successfully?

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[ROFL3]
You know Mister Douglas. This here is knotty pine. Cost extra for them
https://sp.yimg.com/xj/th?id=OIP.M9f...=0&w=300&h=300

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Originally Posted by sniper7

After talking to Jim I think I'll just sell it and call it good. See if I can exclude the mineral rights in the sale of the house and keep the money coming if it is worth while.

quick question, though, I thought of calling them and asking for 20-22% and maybe a bigger signing bonus. Has anybody done that successfully?

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Likewise, we did. 6 yrs ago had three companies competing for leases. So yes you can negotiate, probably not as much leverage at the moment, one of my leases expired last year on acreage, nobody beating the door down to re lease it.
landmen mess up occasionally. A company drilled two wells and only after producing for three months did they discover that the surface owners did not own the mineral rights. Was a recipient of a pleasant surprise, we had inherited the mineral rights and did not know it. contemplated the sharing of revenues of the well, but eventually decided that sharing in the potential refracking or horizontal drilling costs far exceeded my financial capabilities, and as it has turned out, wells did not produce very long.

These are all in the Greeley, Eaton, Pierce area.
For starting investigation, some oil and gas attorneys will give you a 30 min free consultation for some basics. It can get very complicated, quickly. For example only leasing at a specific depth range for oil and gas, a different lease with a different company for a deeper formation for oil and gas or different terms for the other formation.
Of course there could be other minerals as well in the ground besides oil and gas.

Good luck
PS, Jims advice is probably right on, get the best lease you can, sever the mineral rights in the land sale, and get a little to maybe a lot of play money for a while.

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Originally Posted by ColoradoTJ

When crude is 27.00 a barrel, the wells are not in production. Now when crude is at 140.00 a barrel, those wells never stop producing unless maintenance is needed. Right meow, the wells are not in production.

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That might be the case in ND, although the producers I work with up there are still running wells, but here in CO, they have to produce from them with some frequency, or they have to P&A the well, by State law. Every O&G customer I have here in CO is running most of their wells.

Even though many of the producers cannot make money at $27/bbl, they are still running their wells simply to service the debt that is carried by the company.

To the OP:

You can try to negotiate, and should (O&G companies are in the business to make money, not just hand it out for free), but don't expect numbers like some have mentioned in here. The O&G market absolutely sucks currently.

Cheap gas/diesel sucks.

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Originally Posted by sniper7

I have no idea if I own the mineral rights. Not even sure where to find out if I do?

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Easy, your closing papers will have spelled all of this out. Their will be a title insurance policy issued on the property.
if they didn't own the minerals, they most likely wouldn't contact you. You can choose not to sign, but that doesn't necessarily stop the exploration.

There must be a renewed speculation after opec. Getting offers again