We have 36 net acres of oil/gas in Loving County Texas that we are selling. One of the properties has executive control. The minerals are leased to Anadarko. How do I find a fair market value? Any help would be great.
Natalie - unfortunately there's no place to find a quick and easy value for your minerals/royalty. Location, whether there are any wells currently producing on the property, and/or if new wells are permitted currently all play a factor, among others. The legal description of your property(ies) would help forum members give their advice or what they sold for or have been offered close to your property.
If you have agreed to a price, that is the value. Depending on the level of the technical education you have of the property, the agreed price may or may not be a "Fair Market Value". FMV is generally defined by regulatory agencies as the price agreeable to an experienced buyer and an seller educated in the appropriate industry applicable to the transaction made with out external duress by either party.
The owner should consider the "Proven Reserves" contained in the property; a term of economic art, and what I refer to as the speculative value of the Rresources expected that may be covered to Reserves with the risk of exploration as determined by the geologic potential and activity in the immediate area. FMV is never static but changes over time, physical, and economic circumstances.
Executive rights can be a part of an evaluation are predominately circumstantial rather than factual. Non-producing lease terms are a part of the Speculative value unless drilling and completion has occurred.
Using rule of thumb or average factors to assess value is fraught with danger. When using averages with out experience will guarantee that one of the parties will get burned. That party is rarely the buyer.
Natalie,
As others have said, location is a key driver of value. If you post the legal description we can give you an idea as to what is going on in your area. Other important factors to take into consideration are whether or not it is leased, if it is leased what are the terms and who is/would be the operator, if it is producing what does the cash flow look like, how much room is there to drill additional wells, etc...
Anadarko has some great acreage in Loving County, and if you are being asked to sell your minerals, odds are the purchase offer is far below what the minerals are actually worth.
My advice would be to reach out to one of the forum sponsors that may have an idea of what comparable properties are selling for in your area. http://marketplace.mineralrightsforum.com/ad-category/minerals-management-consultants/
Best of luck!
I'll find the descriptions. Most are producing, a few are in the distribution order frame and a couple are in the exploring. One of the oil wells just starting distributing.