My brother and I have inherited a small severed mineral interest in sec 4 T6N-R61W. Our interest is not currently leased. It was last leased in 2016. My brother wishes to sell his interest and I want to buy his interest from him but I don’t know a fair price per acre for minerals in this area. Has anyone in this area had any recent offers?
The nearest activity is in Section 6, two miles to the west where Verdad is currently drilling horizontal wells.
When was the last time you all received an offer to lease or sell? Theres no such thing as a fair price in minerals, as of now the fair price would be $0.00 since they have not been leased nor had any production in almost 10 years.
By that metric, if you build a house, it’s not worth anything until you sell it???
You gauge mineral values by comparable sales which are a proxy for that property. This usually means the most recent and proximate sale, but it can also mean a multiple of such leases as exist. More important than mere county or township, the correct metric would be comparable geology which is not always easy to know. And unlike other real estate (and minerals are real property) prices can change rapidly with price changes or nearby exploration or leasing. If you are getting letters it likely means leasing is ongoing nearby. But no offers do not render a property worthless, Some one somewhere like take the risk. And sometimes that risk doesn’t pay off for a generation or two.
If they havent been leased in almost 10 years and no company has bought minerals in the section since, one could say that the companies have spoken as to the current value. So, what you value the minerals at for him to sell?
After researching this forum’s past posts, I found one from a year ago that concerns the adjoining section to the south. The poster had an offer of $1500/acre. The message thread never stated whether the poster took the offer or received any other offers. But at least that is a starting place.
JVT, you might be able to find deeds that were recorded for sales nearby. However, since ND doesn’t have a transfer tax, you won’t be able to find the sales price. You asked a question. My answer, for better or worse, is $100 per net acre.
Buyers who know this area would love to get minerals for $100/acre but no one would sell for 10x that price.
As a certified general appraiser and reg. prof. geologist I do not “guess” what they might bring. The lack of a recent sale says nothing about what a speculative buyer of minerals might pay. That would depend entirely upon the market. Obviously areas with low activity won’t see high dollar sales but almost any mineral right not impaired by government regulation (like being in a wildlife area, state park, etc.) has some nominal value. But I am sure there are sales in Weld county that can be used as a proxy for the value.
You’ve got some activity nearby… Verdad may drill those permitted wells, might not. The wells just a few miles west and southwest are ok. Kinda in line with the rest of the basin. Not sure why activity falls off a cliff as it enters R61W from R62W. I’d call it fringe acreage. Last asking price I saw for fringe, along the border of development acreage, in the NorthEast part of Weld was ~$750/NMA, and no idea if that closed or not.
Since he’s your brother, and he really wants to sell, offer what you both can shake on and feel fair. If it ends up staying a $0, so be it. If they drill some monster wells and you make some bank, buy him lunch.
Or cut me in!
Ive worked in the industry off and on for 30+ years and have owned minerals for 40+ years, youre the 1st certified general appraised Ive met. The original post was about what he should offer his brother right now to buy his minerals. Given there is no production and no offers to lease, I was a bit harsh and said current value is $0.00, so lets say $100.00 an acre. As a certified appraiser, what would you value the minerals at right now, with no production, no interest in leasing nor buying from any companies over the last 10 years?
As a certified appraiser, I have to produce a supported valuation to a minimum standard known as USPAP. Therefore, i cannot pull a number from the air without creating a work file and complying with the regulations I work under. I am the author of a book called “The Appraisal of Mineral Rights”, I’ve taught a class to appraisers in Pennsylvania, Oklahoma and Arkansas. There are others like me mostly found in the International Association of Mineral Appraisers, however, I am not a member and there are other mineral appraisers working under their engineering licenses as well.
So how do you appraise minerals that havent been leased in 10 years and no production? You can pull offsetting sections, but if a mineral owner in those offsetting sections havent sold to a company in years, how do you determine the present day value? Im not trying to be rude, genuinely curious how you determine value in cases like this? It seems like youd have to pull a number from the air, If the minerals have no production, havent been leased and the offsetting sections fall under the same category.
