- Establish that the seller really wants to sell.
- Most properties are sold because the seller gets more money than their worth. Keep in mind the definition of “Fair Market Value”.*
- Establishing a “niche” can beneficial but it’s also important to be flexible.
- Rules of thumb should be used only for initial screening and sizing. Discard them when getting down to the business of bidding.
- Attempt to buy properties that have some upside potential and minimize the upfront cost for any upside.
- If the economics of a purchase are good only if product prices escalate, DON’T BUY!
- Never forget the power of a field trip.
- Value spread can be important and the risks should be understood. (Too much value in too few leases can cause acquisitions to fail if key properties develop reservoir or mechanical problems.)
- Look at ALL of the data.
- Be absolutely sure that fish, fowl, animals and humans can co-exist with your producing wells, so evaluate the environment liability BEFORE closing.
*“The price at which a property would be sold by a willing seller to a willing buyer, neither being under compulsion to buy or sell, and both being competent and having reasonable knowledge of the facts.”