What are My Oil and Gas Mineral Rights Worth?

 

Upon the consideration of selling your oil and gas mineral rights, the first question asked is usually, “What are my mineral rights worth?” Fortunately, in this day and age, good information is available to assist in the difficult task of determining the value of your mineral rights.

In a very basic scenario where a mineral owner is receiving monthly royalty income from producing wells, they may be able to receive anywhere from 36 to 72 times their average monthly income over a six-month period. However, an estimate of what your mineral rights are worth contains so many variables that a person must consider the following factors in order to evaluate an offer to purchase your mineral interest:

Value of Oil and Gas Mineral rights rates fluctuate daily: Because mineral rights are tied to a commodity, oil and natural gas, they rise and fall daily as those prices fluctuate on the commodities exchange. Therefore, you must always be aware of the current daily rate as posted on the New York Mercantile Exchange (NYMEX).

Zones of potential production: Not every acre of land is created equally. Drilling under some acreage may yield the potential to produce from three or even five different zones while other acreage may only be productive from one. Depending on how many zones of potential production lie beneath your acreage will affect the value of your mineral rights greatly.

Age of wells: If you have aging oil and/or gas wells on your property, the reliability and amount of reserves remaining in those wells is a large factor of mineral value. Data, such as permits, well reports, completion reports, check stubs and decline curves can all be extremely useful in determining the value of mineral rights.    

Market Rate: Similar to a house appraisal or sales comparison data, the market rate of recent oil and gas mineral rights sales in the surrounding areas should be considered to assist in determining what the value of your specific mineral rights might be.

Likelihood of future drilling: One of the largest factors in determining the value of mineral rights is whether or not the opportunity for the drilling of wells in the future exist. If there is no ability either because of a regulatory/legal situation or if there are simply no oil or gas reserves remaining in the ground, there is essentially zero value attributable to your minerals for future development. If your mineral rights are not currently producing then the ability to drill future wells is where all of your value lies.  

   At Gallatin Natural Resources, we strive to help mineral and royalty owners understand the value of their mineral rights and what their options may be with regard to divesting all or a portion of their rights.