Determining value

How can someone determine the value of 3 leases in Kingfisher County, currently paying around $4000 per year, for the purposes of probating a will? Any advice would be appreciated. I'm new, so sorry if I'm in the wrong group.

There are sophisticated ways of doing this, including doing an appraisal. However, for probate purposes, I have seen attorneys use a multiple of annual revenue to determine value. Specifically, for stable production, six times the annual income (or less). In your case, that would be $24,000. Assuming you are no where near paying any estate taxes or affecting any distributions, this should suffice.

Thank you so much! That helps a lot.


It takes a very experienced individual to calculate a somewhat accurate appraisal of a mineral lease, producing or non-producing. Factors which must be considered are numerous and includes well decline curves, geologic reserves and price variations. Mr. Gary Hutchinson is a professional in this field and he has been a contributing member on this forum for some time. I would contact him and discuss your specific situation as he will be able to provide you with the necessary guidance. His phone number is (303) 279-4113.

Thanks to you, too, Charles. The six year guideline from JW has helped. I also heard from a friend just now that 48 months income was a standard he used 20 or 30 years ago. So at least now I have some kind of idea the value that I didn't have before. The original appraisal was 166 months of income. That's crazy! I will keep Gary's phone number, if needed, for more precise negotiations. Thanks again.


Good luck in solving your matter but I would consider contacting Gary as his contribution will be very beneficial to you.


I probably will when I get the actual lease locations info. I'm assuming he would need that.


You are correct plus any other information you have on your minerals. The more information you can provide, the better in regards to appraisals.


Would you happen to know how long it would take him to generate an appraisal, and his cost?

Steve: No idea on time and cost as this will be something for discussion between both of you. I’m sure it depends on the amount of time it will take to work on the details.

Wouldn't the value also vary depending on whether "for leasing" or "for sale?"

And, I believe that what you will be appraising is what is left in the ground. That which is produced is personal property...the right to get to that personal property is a hard concept to really grasp.

Good Luck,



You are correct in that the appraisal will consider what is left in the ground or as I referred to in my first post as geologic reserves. Tricky parts include for instance, the well(s) decline curves. Another factor to consider is the number of possible producing formations. Again, many factors have to be considered in the appraisal process. The way I understand the original question, was this appraisal is for probate purposes only, not particularly for lease or sale. These are actions which may be taken by the heirs named in the will.


Thanks for the info. What happened was a brother made an off the cuff appraisal of $100,000 for these 3 leases that are currently paying $400 per month. If I go back a few years, I think it may average out to $600 per month. I thought that was way too high, but I had no idea of how to appraise them. I was thinking, if these leases were split 50% - 50% between two people, and one wanted to buy out the other, it would take over 6 years of ALL the income to buy out the other person. That didn't seem financially fair to me. I needed more information. So basically, now I see that the appraisal should be around $40,000, ballpark, instead of $100,000 and so now I can work from there. If we must get a professional appraisal, I will share what I've learned.

sorry i am new in that type of business so also don't Have any idea Good luck

Real Estate Phoenix

Dear Mr.Prichard,

For Estate Tax purposes the Feds will accept a multiplier of 3x annual production or 36 times average monthly production for the last year. If you have an acceptable way to determine value, such as a hyperbolic decline curve, then they will accept that also.

Having said all of that, do NOT believe me and consult your tax attorney.