How to determine Royalty Values


#1

I own mineral rights on 15 acres in Weld Co., CO. T 5N, R 65 W SE1/4Sw1/4; SE1/4. I have received several calls wanting to buy my the rights but they vary widely. I inherited the rights and live in a state that has no minerals so am completely in the dark about these things. Any help in determining value will be appreciated. Thanks


#6

As mentioned on multiple other posts, an engineering appraisal will not give you market value, it will give you an engineered value. If you want to know what your property is worth in today’s market, then you need to look at similar property transactions. You could use the production profiles from an engineering assessment with other variables, such as prices, etc and utilized a discount rate to estimate what the present value of the property is worth when incorporating those assumptions. With that said, market value is exactly that…what the market will pay for your property. PV10 (aka an engineering value) is meaningless when it comes to the concept of a ‘market value’