My sister and I along with several cousins own undivided mineral rights to our great grandparents property. One cousin wants to sell. We are interested in buying in order to keep it all in the family. How do we go about determining the value of these mineral rights? I know there are companies always offering to buy, but we are told that they are usually very low. This is 160 acres in Roger Mills County, Oklahoma; section 3, township 16N, range 25W. The mineral rights are currently under lease. There is drilling activity in the area and some production, but none on this property.
Minerals in this township and range have gone for about 2000/acre in the last two years. An alternative rule of thumb is two - three times the lease bonus paid under the current lease.
Janice:
There has been numerous posts on this forum regarding this topic. I suggest that you click on "forums" above and google in "value of mineral rights" in the box at the top of the page. You can read what has been stated regarding this topic over the past few years. Lots of great info in these replies.
When I asked my attorney the same question, the general answer was somewhat similar.
For generic purposes, 2-3 times lease bonus (if leased) if not productive yet. If unleased, then it is a little harder, but you try for the lease bonus in the general area. If oil production, then four times the previous year's income. If gas only, then seven times the previous year's income. If you really want to get it right, then you hire a petroleum engineer to evaluate it. If you get offers from outside firms, then the number I have heard most often is the first offer is 30-50% of what they (the buyer) thinks it is worth. You have to take into account the current or possible future activity in the area. It all comes down to "willing buyer" and "willing seller". If you are dealing with family, then other factors may come into account-to the positive or to the negative.
Thank you all for your responses. The 2-3 times current lease bonus seems to be a standard. In this case, however, activity in the area has slowed and almost stopped since the lease was issued almost 2 years ago. So, I question whether that rule of thumb still applies. Dealing with family does make it more difficult.
Apache did a lot of leasing in section 3 in 2013. The newest well permitted is in Section 35-17N-25W which is just to your north. Chesapeake may not drill their leases which they took in 2011-12, but looks like Apache might be picking up the slack. So I would not say it is a dead area. In this case, 2-3 may still apply.
I am paying between $2500 and $5000 for Roger Mills County mineral rights. Where yours are I would pay $3000 per mineral acre just to give you an idea of pricing. I attended a recent large mineral auction that had some mineral rights that sold not very far from yours and the high bid sale price was $2600 per acre. At auctions price can depend on how many acres your selling, these were large tracts that sold.