I inherited minerals from a relative and need to calculate the value when I inherited them, so if I sell the minerals later, I will know what my basis is.
I THINK I have a solution that will give a pretty close value of what they were worth, but I wanted to see if anyone had a better idea.
Given the value of the minerals, it is not worth hiring someone to determine their value.
I inherited only the minerals without leases/wells, and no surface land.
Location: Tyler County, WV.
Several of the mineral tracts I inherited were also included in a “Notice of Lis Pendens” and resulting court orders to “quiet the title”. In WV, if the oil company wants to lease the minerals AND they are unable to find all the owners, the oil company can show the court they tried to find the owners but were unable to. If the court approves, a “Special Commissioners Deed” is issued to the county to document the owners that could be “found”. This court approved deed does several things: (a) It lists the owners who could be located, (b) It Quit Claims the owners who could not be located, and (c) It lists the dollar amount of a bond for the minerals for the owners that could not be located. The bond is paid to WV.
If the unlocated owners approach the court within 7 years the money put aside by WV for them is paid to them for the minerals (but they don’t get an oil lease). This allows the oil companies to drill, the located mineral owners to get their share, and WV gets its cut of the revenue.
Knowing the value of the bond, and knowing the “Unleased Interest” in acres, I can calculate what the value is of the minerals per acre. I can then compute what my minerals are worth.
Example:
Acreage of Owners That Could Not Be located: 5.86 acres total
Total Consideration Paid for Unlocated Owners: $29,710
Calculated Worth per mineral acre: $5,070 per mineral acre
I also have access to other “Special Commissioners Deeds” from the time frame of my relative’s death that are in the same area as the inherited minerals, which I can also factor in.
Does anyone have an opinion on this approach?