I inherited my minerals with my mom’s death in 2020. I am now considering an offer to sell them. but I would really like to know my position from a capital gain or loss.
I tried the CAGI website for my account, but they only go back to 2022. And those values looked really low for the revenue they were generating as compared to today.
So is there a way a mere mortal can ascertain the value I would use as a base for my minerals near Toyah in the Alpine High?
Tracy Lenz at Pecan Tree can determine the value. See link to website in Directories / Mineral Services above.
thanks for the lead. have reached out to Pecan Tree to see what such an assessment would cost.
The recommendation is much appreciated! Thanks!
I spent some time at the Reeves County Appraisal district web interface and they had nothing for me for year of inheritance. Nothing looked right for my mom’s account for 2020 as well. The 2019 numbers seemed close. Trying to recall but this may have been a time when Reeves CAD was having real issues and had tried to go it alone instead of using CAG to handle their minerals.
Might be easier/less costly to just pay a capital gains by letting IRS assign a zero basis. Possibly lower cost than hiring someone to calculate a basis.
Apache invested heavily in Alpine High in Reeves County and drilled a lot of gas wells. Gas prices continued to fall and development came to a halt. Many of the wells were shut-in or choked back. So the value at death may have been quite high and even after netting out the last few years of depletion, the owner could have a capital loss.
Hopefully whoever does the analysis performs a “does this make sense to do” check before starting any work (it’s part of our process at least). An appraiser should at least know the ballpark of possible results before starting the appraisal project, assuming they’re experienced, even if they can’t (and shouldn’t) guarantee the final results will be within that range.
If even the low end of the ballpark wouldn’t save the client enough money on taxes to pay for the cost of the project, then there’d need to be some external reason for needing it to continue. You’re just going to have an unhappy client if you continue blindly.
Hi Tracy,
I also inherited minerals from a relative and also need to calculate the value when I inherited the minerals.
I THINK I have a solution that will give a pretty close value of what they were worth, and I wanted to bounce it off you. This may also help f100owner who posted the original question.
Given the value of my minerals, it would also not be worth hiring someone to determine their value. By the way, thanks for your honesty in your post about that issue!
Minerals that I inherited without lease/wells, just the minerals.
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 “found” owners. 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 which the owners 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 Commissions 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.
What do you think of this approach?
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