Confirm that the offers cover the same property.
Two offers can show different totals because they assume different acreage or include different tracts, wells, leases or counties. Begin by placing the property descriptions side by side.
- Which state, county, survey, tract, lease, unit and wells are included?
- Does the proposal cover producing interests, nonproducing interests, or both?
- Does it include adjacent lands, after-acquired title or broad county-wide language?
- Is the buyer purchasing all ownership or a stated percentage?
Separate total price from ownership assumptions.
Offers are often priced per acre, but “acre” may refer to two different measurements. Net mineral acres measure the mineral ownership attributed to an owner. Net royalty acres adjust that figure to a standardized royalty basis. For example, one net mineral acre subject to a one-quarter lease royalty is commonly treated as two net royalty acres using the traditional one-eighth convention.
A price quoted per net royalty acre will therefore look smaller than the equivalent price per net mineral acre. Ask each buyer which acreage basis and quantity it assumed, then convert both offers to the same basis before comparing them. A large total based on acreage you may not own can be difficult to compare with a fixed offer covering confirmed interests. A recent royalty statement may help identify the decimal interest, property and operator used in the evaluation.
Review the adjustment rights.
Many transactions include a title and diligence period. Determine whether the buyer may reduce the price, exclude properties or terminate—and what happens if the parties disagree about ownership.
Timing
Compare the option period, target closing date and any extension rights.
Costs
Confirm who pays title, recording, curative and closing expenses.
Payment
Understand whether funds are delivered by wire, check or escrow and when they become available.
Documents
Read the purchase agreement and deed together so the conveyed property matches the deal.
Compare the same assets, on the same ownership basis, under the same closing assumptions.
Use Valcor’s interactive offer-comparison worksheet to organize two proposals before reviewing the legal documents.