FAQs

FAQs

1. Why should I sell my interest to you?

We will treat you with the same honesty, integrity, fairness, and privacy that we hope to be treated with. Our intent is to make the entire process as simple and uncomplicated for you as possible. We strive to make competitive offers that will hopefully provide us the opportunity to make a good return on our investment and in turn provide sellers with a good price for their interest. It is our main priority to ensure a pleasurable transaction benefiting both parties. We desire the opportunity to develop a long, fruitful, and mutually beneficial relationship with owners such as yourself.

2. How do I receive an offer from you to acquire my interest?

To request an offer please click here. Alternatively, if you prefer you can simply call us at 1-855-762-5855 (toll-free) or at (432)-683-6100, or send an e-mail to info@aspen-grove.com.

3. If I'm getting offered this much for my interest maybe I would be better off just keeping it. Why should I do otherwise?

A valid thought but one that might want to be expanded upon. If you thought your home was worth $300k what price would you accept to sell that asset? If someone offered you $600k for your home would you use the same logic as you are with your mineral interest? If you view your mineral and royalty interests as investments than knowing what you believe they're worth can help you distinguish legitimately good offers from bad offers.

Knowing at what price you receive more value from selling your interest than you do from keeping your interest is a legitimate exercise for any interest owner. An offer isn't valid forever; especially for illiquid assets.

4. These minerals have been in my family a long time and I was told to keep them. Why should I even consider selling all, or a portion, of them?

Unlike the joy one can experience from inheriting land, a house, or even a book, mineral and royalty interests carry no "enjoyment factor." They are about as enjoyable as a paper weight. Maybe you were told to keep your interests because an ancestor believed they would be worth more in the future, or maybe the ancestor believed by keeping them it would help an heir better facilitate control over the surface of a farm or ranch. In our opinion, whether acquired through investment or inheritance, the primary purpose of owning a mineral interest is for the revenue it is currently generating, the revenue it has the potential to generate, and to a lesser extent for price or enjoyment protection of a surface interest.

For some, disconnecting their sentimental attachment from their investment strategy can be the first step in the decision making process. For others the sentimental attachment alone is strong enough to keep them from entertaining even the thought of selling their interest. Neither viewpoint is wrong. There are a myriad of reasons to sell and not sell your interest. For your convenience a few of those reasons can be found here. If you feel the decision to sell or not sell is an overwhelmingly difficult one we strongly encourage you to reach out to a trusted advisor.

5. It seems like everyone in the county is getting leased and I hear everything will be drilled soon. Why on earth would I want to sell now?

i. High commodity prices, low interest rates, and technological advances recently contributed to one of the largest leasing frenzies in history. Hype and competition in some areas drove lease bonuses to record levels. For those of us who have owned non-producing mineral interests for a long period of time we know that just because our interest gets leased does not, in anyway whatsoever, guarantee a well will be drilled on our tract. Companies can easily spend millions of dollars leasing thousands of acres (based on a little dose of science and big dose of speculation) but can just as easily become disinterested with the entire project should the results of one or two wells turn out to be less than expected. Drilling rumors, whether true or totally false, have a tendency to spread like wildfire. Unless your interest is currently producing, your interest comes with the obvious risk that either it will never produce or it will produce at an unknown future point in time, at an unknown quantity for an unknown period of time. When it comes to considering the sale of non-producing mineral interests sometimes the old adage, 'A bird in the hand is worth two in the bush', says it all.

Because neither of us knows with certainty what the future holds; we often encourage you to consider keeping a percentage of your interest. Transferring a portion of the risk of future non-production for cash, at a known tax rate, while retaining some ability to participate in any future potential upside may solve your dilemma. For a more exhaustive list of potential reasons to sell, or not sell, please click here.

6. Will I have to pay taxes if I sell? How much tax will I owe?

The majority of sellers will only be taxed at the current federal long-term capital gains rate (historically that could translate up to a 20% tax savings). Said rate is based on the gain from the sale and is usually much lower than your ordinary income tax rate. Alternatively you may be able to defer the tax entirely by entering into a section 1031 like-kind exchange. In some circumstances currently provided for under a 1031 exchange one could sell their mineral interest and use 100% of the proceeds to buy a house, ranch, farm, land, or other real property and defer the entire federal tax liability. Aspen Grove Royalty Co, LLC does not provide legal, financial, or accounting advice and urges you to consult with your tax professional regarding your specific tax liability.

7. Am I obligated to sell if I ask to receive an offer from Aspen Grove Royalty Co., LLC?

No. Receiving an offer from Aspen Grove Royalty Co., LLC does not obligate you to sell. Due primarily to the time value of money, as well as many other factors impacting the value of oil and gas properties; we cannot however guarantee an offer we make in the future will be equal to our current offer.

8. How will you evaluate my interest?

Please click here to see how we formulate an offer. If you have recently received an offer and would like a description of how we arrived at our offer feel free to contact us at 1-855-762-5855 (toll-free) or (432)-683-6100 or send an e-mail to info@aspen-grove.com.

9. Do I have to sell 100% of my interest?

No. We are more than happy to work with you on a divestiture that best fits your needs. Depending on your specific circumstance, and assuming your interest is large enough to justify it; we actually prefer you not sell 100% of your interest. This is especially true with non-producing minerals. No matter how smart we think we are, humans are incapable of accurately predicting the future. If you're considering selling we prefer you keep a portion of your interest, just in case something positive happens later that pleasantly surprises us both.

10. If I choose to sell do I have to sell everything I own in the county?

Absolutely not. Our offers are specific to the interest you own in a certain property. If you decide to sell to us, you will only be selling your interest in the property or properties upon which we made an offer. For the exception of the extremely rare circumstance, we believe the use of county wide conveyance documents for transferring ownership of mineral and/or a royalty interests is, at the very least, deceptive and lazy.

11. What are the fees if I decide to sell to Aspen Grove Royalty Co., LLC?

We do not charge any fees whatsoever and we bear all closing costs associated with the transaction.

12. If I decide to sell to Aspen Grove Royalty Co., LLC when will I get paid?

i. Typically, once we reach an agreement, confirm you own clear title to your interest, and upon execution of the necessary paperwork; payment will be received within 24 hours. Having said that, the closing and funding process can be structured a variety of ways to ensure your comfort and satisfaction. Please click here for a more detailed explanation of the closing process. The process is simple and quick once we agree on a price and we confirm that you own clear, marketable title to your interest.

13. How long does the entire process take from requesting an offer to receiving payment?

Currently the average cycle time is around 12 business days. Because every interest is completely unique it is difficult to estimate with a high degree of certainty the transaction life cycle for your particular interest prior to our review of that interest. We have funded and closed some transactions involving one property interest within 48 hours of the owner requesting an offer while some transactions containing many properties have taken over 30 days to close. The due diligence process can be relatively time consuming for the purchaser.

14. Do my mineral interests gain value over time?

Similar to land, mineral interests are real property so one could easily make the erroneous assumption that all minerals gain value over time. In reality whether or not a mineral interest will be worth more inflation adjusted dollars in the future depends on a multitude of factors. The geographic and geologic location, reservoir characteristics, how long it has been producing, well density, technological advances in clean energy initiatives, local state and federal policy changes, political climate, and even the presence of threatened or endangered native animals living in the area, are just a few very basic factors that could impact the future value of a mineral interest.

Many believe the value of a mineral interest is based on its capability to generate revenue, a capability which is derived from the quantity of product a wellbore(s) can produce and sell. Because those revenue generating products are non-renewable we know the longer a well produces the closer it is to depletion. At depletion the interest can produce no more revenue to the mineral owner. If many believe the mineral interest has no capability to generate revenue than the value of the interest is negligible. Following the incapability of an interest to produce a saleable product the market for that interest dwindles to possibly a surface owner or an extreme bonus speculator. In our opinion all mineral interests do not gain value over time.

15. My mineral interest is under my ranch in Texas. I was told I shouldn't sever my minerals from the surface of my ranch. Is this true?

If control of your surface is your main priority and you own 100% of the mineral rights under the surface of your property than we agree with that statement. The value of owning 100% of both the surface estate and mineral estate not only has the potential of making your property worth a lot more intact but, assuming neither estate is subject to a lease, it also gives you complete and total control of the entire property.

It is an entirely different situation if you own less than 100% of the mineral rights under your property. The overwhelming majority of surface owners don't own any of the minerals under their surface or own far less than all the minerals under their surface. Most of the time the surface estate and mineral estate have already been severed. If this is the case than the surface owner has already lost absolute total control. At this point it is still wise to at least keep a portion of the mineral interest rather than divest all of it. We recommend you consult with a trusted land advisor regarding your specific situation.

Should you desire to sell both your surface and mineral interest please give us a call; we might be interested in acquiring both.

16. If you want my interest you either know something I don't or think it is valuable. Why should I sell?

Whether it is because of the cash flow a producing interest generates now, the potential of an interest to generate cash flow in the future, or the ability of an interest to diversify our holdings further; your interest is currently valuable to us. We would not be willing to place our funds at risk if we didn't think it had the potential to add some level of value to our portfolio. Contrary to what you may believe; we don't know with certainty what the future holds for your interest. We obviously hope the interest we purchase from you will provide us with a good return on our investment but we also recognize it may not.

The cyclical nature of our business requires a long term investment strategy, the assumption of great risk, and patient capital. Unlike the ability of most individual mineral owners; our business model provides us with the ability to distribute the risk by acquiring across many geographical areas (states, basins, zones, etc.), property types (non-producing, producing, etc.), and interest types (mineral, royalty, ORRI, NPRI, etc.). Similar to a mutual fund, or a diversified portfolio of stocks, the more prudent diversified acquisitions we make the lower our risk. If we don't make our investment back from one specific interest we acquired in one location we hope the combined return of all the interests we own will offset it.

Whether you derive more value from holding on to your interest or from selling your interest is a decision only you should make. If you are unsure always seek counsel from a trusted advisor. Please click here for discussion points in connection with possible reasons to sell, and not sell, mineral and royalty interests.

17. Why does your letter contain an expiration date?

Our letters contain an expiration date so that we are able to accurately monitor our capital allocation. Unlike some companies in our industry, we only make offers that we have the ability to fund. At any given time, we can have many offers out in multiple counties and states. As a result, we closely monitor those offers to ensure that we have the ability to close all of those transactions in a timely manner should all of those offers be accepted. In certain circumstances, we can offer you additional time to consider your offer should you need it. Simply contact us to discuss such an extension.

18. Why is your offer based on a price per net mineral acre ("NMA")? My letter contains a price per net mineral acre, but what is the total dollar offer amount?

i. Offers made on properties that are not currently producing oil or gas are often based upon a price per net mineral acre rather than a total offer amount. In order to make a total dollar offer we have to know your exact interest. We sometimes structure our offer in this manner because it is very costly to determine an exact interest in a non-producing property, unlike a producing property, which is often easier to determine. To determine a mineral owner's interest in a non-producing property, a land man or title attorney is required to travel to the office of the county clerk in the county in which the property is located and that individual must research the records contained therein from the creation of the state of Texas to the current date. As you can imagine, this can be extremely expensive. Therefore, we only perform this research when a mineral interest owner has made the decision to sell all or a part of his or her interest.

If you already know what your exact mineral interest is then you can often easily determine your net mineral acreage, and thus our total offer amount. If you need help with this calculation feel free to give us a call. Without currently knowing what your interest is, an offer presented on a net mineral acre basis is the most transparent way to make an offer to you that we know of.

19. I know I own a mineral interest, but I don't know how many net mineral acres I own. Is there a way to estimate what your total offer amount would be before you conduct research?

i. A full mineral interest includes the right to receive any bonus payments made in connection with the execution of an oil and gas lease. If you have recently signed an oil and gas lease, then you most likely received a bonus check as consideration for that oil and gas lease. It may be possible to estimate the total dollar offer that we would pay you for your mineral interest by reviewing the letter that came with your bonus check. Specifically, it is likely that letter states the number of net mineral acres that you own in the property. However, even if the exact number of net mineral acres is not specifically included in that letter, you can typically determine the number of net mineral acres you potentially own by dividing your total bonus check by the bonus price per net mineral acre that you were paid (the bonus price per net mineral acre is almost always included in the letter that accompanies your bonus check). The result usually serves as a good indication of the number of net mineral acres that you own.

To determine an estimated total price, simply multiply the number of net mineral acres that you may own by the price per net mineral acre that we offered you. This calculation will give you the estimated total offer amount. For example: ABC Oil Co. offered John Doe $1,000 per net mineral acre as a signing bonus to enter into a 3 year oil and gas lease. John Doe accepted their offer and signed the lease. In exchange for signing the lease ABC Oil Co. gave John Doe a check for $150,000. How many net mineral acres does John Doe most likely own? $150,000/$1,000 = 150 net mineral acres. If a month later ZZ Royalty Co. offered John Doe $7,000 per net mineral acre to purchase his entire mineral interest what is the estimated total dollar amount John Doe would receive for selling his minerals to ZZ Royalty Co.? $7,000 X 150 = $1,050,000.

20. I leased my interest to a company already. Can I still sell it?

You can sell your interest even if you have signed an oil and gas lease. We simply purchase your interest subject to that oil and gas lease. Following our purchase of your interest we notify the lessee of the change of ownership. Nothing is required on your part.

21. If I sell my mineral interest to you, do I have to give back the bonus money I was paid to execute an oil and gas lease?

No. The bonus money you were paid to execute that oil and gas lease is yours to keep.

22. What is a non-participating royalty interest and how does it differ from a mineral interest?

A mineral interest consists of five rights: (1) the right to receive bonus payments; (2) the right to receive delay rentals; (3) the right to receive royalty; (4) the right to execute an oil and gas lease; and (5) the right to enter and develop a property. A non-participating royalty interest only consists of the right to receive royalty. Therefore, this interest is usually worth less than a full mineral interest.

23. I own the surface as well as a portion of the minerals and am unwilling to sell my minerals without selling the surface as well. Any ideas?

In limited circumstances we may be interested in acquiring your surface as well as your minerals. Please contact us directly so that we can evaluate such a transaction.

DISCLAIMER: This information contained herein is not intended to be nor shall it be construed as legal, financial, or accounting advice. You should consult your tax advisor or an attorney about your specific circumstances prior to making a decision to sell all or a part of your mineral or royalty interest.

Quick Contact Info.

Physical Address:
608 North Main Street
Midland, Texas 79701

Mailing Address:
P. O. Box 10588
Midland, Texas 79702-7588

Telephone: (432)-683-6100
Toll-Free: 1-855-762-5855
Facsimile: (432)-685-3621

Email: info@aspen-grove.com