Buyer Tactics: No-Cash Flipping

Many mineral companies don’t have their own funds, but instead act as “brokers” that flip your minerals to another buyer.

This creates two problems for sellers. First, it means you’re not getting the best value, because these brokers acting as middlemen take a cut of your profits.

Second, many brokers will get you to sign a contract, and only afterwards find a buyer for your minerals. You’ll be locked into dealing with them (and forbidden from selling to anyone else), but they can’t necessarily buy your minerals. This creates delays for sellers, and oftentimes means you’re left in the lurch if they can’t find money.

Caddo Minerals is self-funded and we usually buy to hold. As a result, we close deals within 30 calendar days of receiving paperwork. Other companies can take up to 45 business days (almost two months). On the rare occasion where we bring in other parties into an acquisition, we still bring out own money to the table, meaning we stand by our commitments and don’t back out of deals.

To protect yourself, we recommend landowners do two things. First, ask companies up front if they have their own money. If they don’t, be wary. Second, get the company to commit to a closing date in writing and ensure you have the right to walk away if they miss that closing date.