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Information current as of: Friday July 30, 2010 9:39:39 AM CST

Frequently Asked Questions (FAQ)

Find answers to the most common questions here.

  • I would like to speak to a representative. Who do I call?
  • I am interested in Selling with EnergyNet. Tell me more about your sales cycle.

    • If you are considering selling oil and gas properties, please keep EnergyNet in mind as a valuable vehicle to streamline the sale. EnergyNet markets working interests (operated and non-operated), overrides, royalties, and non-producing minerals in the Lower 48 United States. Typically, the properties we sell range in value from $1,000 to $20MM. We have sold packages of properties valued at over $100MM.

      As a seller, you will achieve the maximum dollar amount for your properties by exposing them to the largest universe of registered and accredited bidders (14,500+ and growing), thereby maximizing competition and obtaining the highest possible values.

      Selling properties with EnergyNet is quick and easy, taking approximately 35-40 days from the time you submit your completed data package to the time you receive your proceeds (for 1 property or 100 properties).

      Since EnergyNet runs a continuous auction, you can sell properties whenever you like and never have to worry about cancelled or postponed auctions. You can work at your own pace with no looming deadlines. When you're ready, we're ready.

      We've sold over 30,000 properties for more than 2,500 companies and individuals including Chevron, Apache, Shell, Total, Encana, Devon, Newfield, Chesapeake, Citation, Hilcorp, Samson, and Merit Energy. We have met and exceeded these sellers' expectations, and we will do the same for you.

      Most importantly to you as a seller, we work on a success-based commission, so there is no risk to you. If we do not sell your properties for your price, we do not get paid. That creates strong incentive for us to perform. EnergyNet allows its sellers to set a minimum reserve price on any size property.

      We look forward to working for you!

  • What does EnergyNet's commission include?

    • Property preparation
      Land Staff support
      Scanning of all hardcopy data / electronic data transfer
      Hosting online due diligence data rooms for every lot
      Creation and delivery (mailing and downloads) of bound data package and CD-ROMs to buyers
      Property marketing, advertising and promotion
      Facilitate the competitive bid process/ screen buyers / credit verification / FINRA suitability
      Closing services / post-sale negotiation services
      Wiring / escrow services
      Conveyance documents to seller and buyer recorded

  • Can I set a minimum reserve for a property I'm selling?
    • Yes, a minimum reserve price can be set on any size property, not just the larger ones. This provides price protection, and you are under no obligation to sell the property unless your reserve is met.
  • What documents and information will I need to sell a property?
    • First you need to register as a seller on the website and enter the property data sheets online. To enter property data sheets online:
      1. Log on as a Seller with your user ID & password. If you don't have a user ID & password, please register as a Seller.
      2. Click "Create New Lot" from your Seller's Homepage.
      3. Enter a Lot Name / Short Description
      4. From the drop down menu, choose your property type, for example choose "Non-Operated Working Interest" then click the "Add Property" button. Click /"Create Lot/" to continue.
      5. On the next screen, confirm the Lot Name, then enter the Lot Narrative.
      6. Enter the Recording Fees and Taxes.
      7. Select a State, then a County from the dropdown lists.
      8. Set the Reserve Price
      9. When you're done, click "Save Changes to Lot"
      10. Complete the data sheet and save it.
      11. For multiple properties, return to the "Edit Lot" page and complete the steps again until finished.
      After you've entered the property data sheets online, we will need the following documents to sell your property:

      Seller's Checklist for Working Interests:
      1. Signed EnergyNet Seller's Agreement -- download and print
      2. Notarized & Executed Outgoing Assignment -- leave assignee section blank
      3. Property Data Sheet for each well -- complete the online form -- available from your seller's homepage
      4. Lease Operating Statement for six months or more (or copies of check stubs and joint interest billings)
      5. Copy of Source Document (assignment in to current owner of record)
      6. Any other additional documentation (Well Logs, Engineering Reports, Reserve Reports)
      7. Operated Working Interests need an Equipment Inventory List
      8. Operated Working Interests need Change of Operator Forms (P-4s)
      Seller's Checklist for Overrides and Royalty Interests:
      1. Signed EnergyNet Seller's Agreement -- download and print
      2. Notarized & Executed Outgoing Assignment / Deed -- leave assignee/grantee section blank
      3. Property Data Sheet for each well - complete the online form -- available from your seller's homepage
      4. Copies of Check Stubs
      5. Copy of Source Document (assignment in to current owner of record)
      6. Copy of Division Order
      7. Any other additional documentation that would help market the property
  • What is EnergyNet?
    • EnergyNet offers an easy-to-use oil and gas property auction service that facilitates the sale of producing working interests (operated and non-operated), overrides, royalties, mineral interests, and non-producing leasehold. Most of the properties we sell are located in the lower 48 United States and range in value from $1,000 to $20MM. EnergyNet is a continuous marketplace, with auctions going on every day of the year. We are a FINRA Registered Broker / Dealer.
  • What is your rate of success in selling properties?
    • We have successfully closed 85%+ of all the properties we listed. Please keep in mind that the sellers are able to set the minimum price they are willing to accept, and it is sometimes difficult to get buyer and seller expectations to match up. The EnergyNet competitive bidding process works very effectively to find the right buyers.
  • How many people use your system?
    • We currently have over 14,500 registered bidders with an accumulative credit allowance of over $3 billion in buying power. We have 2,500+ unique sellers, and the numbers are growing daily. We receive on average 2 million hits to the site each month.
  • How do I buy a property?
    • First you must complete the buyer registration, and provide the necessary documentation. You will then be notified by an EnergyNet staff member without delay when you are eligible to bid or make offers on properties. Bidding on properties is easy. When you want to bid, go to the property detail screen, enter your username and password, and enter your bid amount including a bid proxy if desired. It is important that you take precautions to enter the correct amount you wish to bid. Bids CAN NOT be retracted once they are in place.
  • When does the auction end?
    • Since we are a continuous auction, properties are always beginning and ending the auction process. EnergyNet auctions each property or lot individually with a specific end date and time. Our auctions normally run for 7 days, but it is ultimately up to the seller's discretion. All EnergyNet auctions end on a Tuesday, Wednesday, Thursday, or Friday between 10AM and 3PM CST.
  • What is a proxy bid?
    • A proxy bid is a form of incremental bidding with a maximum bid amount set by the bidding party - you. You enter your first bid and specify a maximum amount to which that bid may be increased incrementally as stated for the particular lot being auctioned. Your bid will be automatically increased in the applicable bid increments only to keep your bid the highest bid in the auction until you are the highest bidder at the close of the auction or until your maximum proxy bid amount is exceeded by another bid. This system ensures that you will not be pressured by time during the final moments of an auction.
  • How do I evaluate a property?
    • Due diligence information is available on our site including: assignments, source documents, decline curves, production history, joint interest billings, lease operating statements, check stubs, division orders, and maps. You can also print an indexed data package with a push of a button or order a bound hardcopy or CD-ROM data package.
  • Who handles the filing of assignments & change of operator forms?
    • EnergyNet handles the filing of assignments and change of operator forms.
  • How long does it take to sell a property and receive payment?
    • From the time you submit your seller's agreement and complete data package to EnergyNet to the time you receive a check in your hands is approximately 35 days. It usually takes our staff 5-7 days to prepare your property and activate it on the site, then there is usually a 14-day previewing/due diligence period, then a 7 day auction. After the auction closes, the high bidder has 2 business days to wire money into the EnergyNet escrow account. Once the money is received in whole, we send you a check within 10 business days.
  • Who prepares the assignments?
    • The seller is responsible for preparing the outgoing conveyance instrument, or having it prepared.
  • Does EnergyNet market my property to prospective buyers?
    • Yes, EnergyNet actively markets your properties to prospective buyers. We send out a newsletter email to our entire base of registered users detailing the property, seller, decimal interest, and location. We also make phone calls to operators in the surrounding area, as well as fax notifications to the key decision makers. Currently, the EnergyNet website receives an average of 2 million hits per month.
  • How much do you charge to sell a property?
    • The following commission schedule applies for properties/lots individually selling for less than $500,000 in a calendar month. EnergyNet will give you the lowest possible commission for aggregate sales during a calendar month. For example, if you were to sell 20 properties with an aggregate sales total of $800,000, your commission would be 5%.
      Gross Sales PriceCommission
      < $100,00010%
      $200,0009.5%
      $300,0007%
      $400,0006.75%
      $500,0006.50%
      $600,0006%
      $700,0005.50%
      $800,0005%
      $900,0004.75%
      $1,000,0004.50%
      > $1,000,0004%

      The following commission schedule applies for properties/lots individually selling for greater than or equal to $500,000 in a calendar month.

      Gross Sales PriceCommission
      First $ Million4.0%
      Second $ Million3.5%
      Third $ Million3.0%
      Fourth $ Million2.75%
      Fifth $ Million2.25%
      Greater than $ 6 Million2.0%
  • What other costs are involved in selling a property?
    • The only cost to the seller is a commission if the property sells, as long as we agree on the minimum reserve price. We do not charge marketing fees and we do not charge you if your property does not sell.
  • Does EnergyNet provide engineering analysis on the properties listed on the auction website?
    • Yes, EnergyNet provides engineering analysis per the seller's request on larger value properties and operationally complex properties. We typically use 3rd party independent engineering firms that have expertise in a specific geographic region to provide reserve report analysis and to identify upside opportunities. We prefer to use independent firms to insure an arms-length approach to the commercial market evaluation of the properties and to maintain the integrity of our offering process.
  • What safeguards does EnergyNet have in place to make sure Operated Properties are sold and conveyed to reputable operators?
    • EnergyNet offers a secure system for collecting information and vetting operators prior to accepting bids for operated properties.

      Step 1: Operator Information Collection

      When bidding on an operated property, the potential buyer provides the name of the operating company (or contract operator company if applicable), the states that the company is licensed to operate in, and the operator number(s). The potential buyer must assert they understand paragraph 4 of the EnergyNet Buyer's Agreement and that they will provide operator bonds and certificates prior to closing.

      EnergyNet maintains a record of all submitted information, including the password verified identity of the potential buyer as well as the time the information is submitted.

      Step 2: Verification and Seller Approval

      After the auction has ended and the winning bidder has been determined, the bidder will be required to fax EnergyNet a copy of their operator bond and certificate/license. EnergyNet will then use their previously provided operator number to verify they are currently in good standing with the appropriate regulatory agency. EnergyNet will email the seller the name and address of the buyer along with the supporting documentation showing that they are an operator in good standing, and based on this information, the seller will have the option to approve or disapprove of the transaction before any funds are exchanged or any documents are filed of record. EnergyNet can complete this verification and approval process in ten business days following the close of the auction. Ultimately, the Seller will know the buyer's identity and operator status before the transaction is consummated, but the vetting process will not be so encumbering as to deter competition during the auction phase of the sales process.

  • Who are your buyers?
    • Our 14,500+ pre-qualified bidders include publicly traded E&P companies, privately-held E&P companies, private equity backed start-ups, upstream master limited partnerships, small-to-medium sized regional oil & gas operators, royalty aggregators, investment groups and high net worth individuals. EnerygNet's pre-qualified bidders represent the marketplace.
  • What type of properties sell best in the EnergyNet auction?
    • All types of interests sell daily in the EnergyNet auction including; Operated Working Interests, Non-Operated Working Interests, Overriding Royalty Interests, Royalty Interests, Mineral Interests, Leasehold Interests and even Rural Surface Properties. Please remember that properties with well-documented production information / due diligence supported by sufficient financial and ownership information sell best in the EnergyNet auction. The more information a buyer has available the more comfortable with bidding the buyer becomes.
  • What type of properties sell best in an EnergyNet private sale?
    • A private negotiated sale should be employed for properties that have significant upside potential, or in the case that a seller would rather offer the property package to a smaller set of potential purchasers. A private sale is also a great approach if you are looking for a discrete way to monetize your assets.
  • How are you sure the buyer will pay for the properties purchased?
    • EnergyNet contacts every registered buyer’s bank or financial institution and verifies that their requested bid allowance is sufficient and liquid. Every EnergyNet bidder has signed the EnergyNet Buyer's Agreement, established a bid allowance, and certified that they are a sophisticated and knowledgeable oil and gas investor.
  • How do I get on your mailing list to be notified of upcoming property sales?
    • You will be notified of all upcoming properties for sale through a weekly e-mail newsletter after you register as a buyer. You can also create a "Saved Search" from your Buyer’s Homepage that will notify you of a property that meets your search criteria (Operations in Oklahoma for example) when the lot is activated (live) on the EnergyNet website. Contact your area Business Development representative to keep an eye on specific acquisition opportunities.
  • What are my obligations on a property where I am the winning bidder but the seller’s minimum reserve price was not met?
    • The high bid in the auction is a binding and valid offer even if the seller’s minimum reserve price is not met, so long as the seller accepts it. If the seller makes a counter offer to your high bid in the auction, as in any negotiation, you can increase your offer, stand firm, or walk away. It is EnergyNet’s protocol to negotiate with the high bidder in the auction to work out a deal before moving to the second highest bidder. If you choose not to bid during an auction, you minimize your chances of negotiation after the lot has closed.
  • What if I am not available to bid on the last day of the auction? What types of bidding does EnergyNet offer?
    • When bidding on a lot, you may enter a flat bid, a proxy, or both.

      A "flat bid" is a one-time bid. If your flat bid meets the "minimum next bid" amount and exceeds the highest bid recorded at the time of your bid, you will become the new high bidder.

      If you choose to place a proxy instead of (or in addition to) a flat bid, you are asking EnergyNet's bid engine to bid automatically on your behalf, up to the amount you have specified. EnergyNet will place bids at the minimum amount to maintain your status as high bidder. For example, if you place a proxy of ,000 on an auction with a current high bid of ,000, your new proxy will place a bid automatically at ,000, the next minimum increment, to make you the new high bidder. Your proxy will then continue to bid whenever you are outbid, but it will only bid up to, and including, the ,000 limit you specified.

      For more information on proxy bidding, please contact your area Business Development representative.

  • What are the obligations of the backup bidder?
    • There are no obligations to the second highest bidder in the EnergyNet auction. If the seller’s minimum reserve price is not met, and we are unable to successfully negotiate a price with the high bidder, we will contact the second highest bidder to begin negotiations, but there is no obligation.
  • If I am the successful buyer of a property in the EnergyNet auction, when do I take title?
    • After you are deemed the winning bidder of a property, EnergyNet will send you an invoice and we will use your bidder registration information to complete the conveyancing documents. After the funds are received in full and all contractual obligations (i.e. preferential rights, consents to assign, etc.) are waived or exercised and all regulatory filings (change of operator forms, etc.) are complete, EnergyNet will send the conveyance documents for recording. We will then send the buyer and seller recorded copies.
  • How can I find out what a property sold for after the EnergyNet auction has ended?
  • Where can I obtain transaction metrics for EnergyNet property sales from the past 12 months?
  • At what price should I set my minimum reserve price?
  • Do prospective bidders know my minimum reserve price?
    • No, your reserve price is confidential and is never revealed to prospective bidders. However, there will be notification once the bids have met or exceeded your minimum reserve price letting them know that the auction is now absolute.