I’m trying to help an elderly couple who live out of state figure out what their mineral rights are worth. Legal description shows Lots 1 and 2, Section 18, 24N, 16W. They own 66.5 acres. Can anyone help me with this?
I moved this to Woods County, OK to see if someone in that area is more familiar. Horizontal drilling is moving into Woods county, but not quite that far north yet. Are they getting production from the Elaine well?
I’m not exactly sure what well they might be getting anything from. I’m not even sure how to find that out. Can you help me with that??
The Elaine is the well on that property. If they are getting royalties (checks), then the property is worth more than if they are not.
They are getting about $15-$20 per month but they aren’t even sure what leases are in effect. There may be some production they aren’t getting paid on. They are quite elderly and live in Washington state now and the daughter is trying to sort all this out. Do they need to get a landman to do a full search for them??
Then they are held by production. If they leased before about 1990 or so, they may need a landman to go to the courthouse to look up their lease. If after, then it may be found online through the county clerk’s online portal. If they are looking to sell, they may have capital gains tax on a sale. If they are looking to help the children out, it may be better to put into their estate with a will and they will give any children a “step up value” that would help their tax picture if they had to sell later.
Forgive my ignorance but what does “held by production” mean? They are looking to sell. Do you know what the capital gains rate for mineral rights would be?
“Held by Production” simply means that there is a producing well attributed to the acreage, royalty payments are being made to the mineral owner, and the lease that was executed that gave the company permission to drill the well is still valid. The lease is technically what is being “held” by the production of the well.
There are many things to take into account for valuing your minerals…and the short answer is it’s very subjective. Some people say that a good gauge may be 2X or 3X whatever the last signing bonus was…so for example, if you signed for $1000/ac, maybe look for $2000-$3000/acre. Very generally speaking, the royalty produced is another way to gauge that value. There are many things to consider - how many wells are on the property, how long have they been producing (and how many hydrocarbons remain to be recovered), will more wells be drilled (if so, when, 6 mos, 1 year, longer), is there additional potential in other zones?
Unfortunately, I believe that Woods County in OK is one of the very few that does not have online records at this time (I may be incorrect but it isn’t on some of the more popular hosting sites).
I hope this is somewhat helpful information for you.
Thank you,
Nick Hunley, Attorney, CPL Disclaimer: This post is for informational purposes only and is not legal advice.
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Richard Winblad
These comments are for informational purposes only and should not be considered legal advice.