Utica Shale Mineral Rights Offers In Mail

It’s hard to say whether you could classify the current Ohio Utica Shale mineral rights purchase offer letter mail-outs an outright “scam,” but one thing most of the companies have in common is that they prey on uninformed,  often elderly landowners. In most parts of the United States, mineral rights (which can include the right to mine for coal, gold, oil and gas, etc.) belong to the landowner if they were passed on in the deed they received when purchasing the land. Mineral rights, which are treated as real property, can be severed from the surface land. For example, a farmer may not own the rights to oil and gas and other minerals under his property if any of the previous owners of the land inserted a simple clause in the deed, such as “I convey the surface only of…”  You can imagine the frustration a landowner may feel it they see an oil rig move onto their land, knowing that the only money they will receive from the oil company will be for surface damages. In terms of “who owns the mineral rights,” the situation can get even more complicated when a number of owners over the years each withheld a small portion of the mineral rights, such as 1/64th, each time the property changed hands.

One reason that oil and gas landmen are highly paid, is that they are very experienced at researching the “chain of title” on a property, sometimes going back decades, even as far as colonial times or in the case of the American Southwest, back to Spanish land grants.  By looking at each and every successive title to the property, they can tell where mineral rights were either held or passed on by the seller. A few words of legalese are all that it takes for one family to receive a fortune in oil and gas royalties and another to be left out. Since minerals may have been reserved in a deed that one of your ancestors signed years ago, you may not even know that you have inherited them until the day you get what seems like a generous check in the mail from an oil and gas mineral rights buyer.

In many cases this “mailbox money” seems almost like a gift from heaven. I shudder to think of the success rate of “bottom feeder” mineral rights buyers who make unsuspecting people offers of this type. Many recipients of these borderline scam letters are elderly or do not have the financial sophistication to understand that they are giving away for pennies on the dollar.

What To Do If You Get A Letter Offering To Buy Your Mineral Rights

If you have received a letter from a company offering to buy your mineral rights in Ohio or Pennsylvania, it is most likely because oil and gas drilling in the Utica – Point Pleasant shale or Marcellus shale is about to occur (or is already occurring) near property where you own mineral rights.  The company or individual has probably already done extensive research and has identified you as a full or partial owner of the rights to oil and gas below a parcel of land.

In most cases, these bottom feeder mineral rights buyers will turn around and sell those rights (or lease them for thousands per acre) to oil and gas exploration companies. In doing so these individuals can often turn a handsome profit.  For example, let’s say that the “XYZ Mineral Trust Company” offers John Q. Farmer $4,100 to purchase all of his interest in 100 acres in Mahoning County Ohio. Mr. Farmer thinks this is wonderful, since he didn’t even realize that he owned the mineral rights. (Mr. Farmer’s grandparents sold the land years ago, but inserted language in the deed that reserved the rights to all oil and gas under the property for themselves and their heirs.) Farmer goes ahead and signs the enclosed mineral and royalty deed and cashes the check. The buyer, Real Slick Oil Properties Inc. promptly turns around and leases the land for two thousand dollars per acre to Big Energy Company, with an 18% royalty provision. The slick mineral rights buyer makes several thousand on the deal, plus a big share of whatever oil and gas is ever produced from the property.

While any sense of “fairness” is clearly out of the question, technically there is nothing illegal about these kinds of transactions.

The moral of the story is this: If you get an offer in the mail to buy your mineral rights, proceed with utmost caution. Take the deal to a knowledgeable oil and gas attorney in your area and have them review it carefully. They can help you decide the best course of action, such as joining a Utica Shale landowners group, or placing you in touch with a reputable landman who can act as an intermediary between you and oil and gas companies who seek to drill on your property.

Please Pass It On

Have you received an offer in the mail, along with a check for mineral rights in Ohio or elsewhere? If so, please proceed with caution. Also, forward this article on via Facebook or e-mail to friends and family who may be receiving similar offers in the mail for oil and gas rights.

Know Of Any Utica Shale Mineral Rights Or Leasing Scams Out There?

Feel free to comment on them below, but please do not mention company or individual names, as this can be construed as slander.