What is the best way to find out the current value of our mineral rights? Taking the last 3 checks average amount, times 36 months, seems simplistic and really low. Do we need an appraisal by a pro? How can I find this out without breaking the bank? Any advice would be most appreciated. Thank you.
It depends upon what you need the appraisal for. If it is because there was a death and the mineral rights are being transferred, then the County Probate Referee will be the person who will appraise the mineral rights for the transfer. If you simply want to know the value for personal reasons or for reasons related to marketing the mineral rights for potential sale, then I have seen numerous ways to do so. You are correct that the simplistic ones are typical, but I typically see taking the last year's royalties' average and calculating it out for the next five to seven years. Being an interest in real property, such a sale is a negotiation and the value is dependent upon what a willing buyer will pay in an arms-length negotiation. Finally, if you need something more precise, a petroleum engineer can determine a value based upon the reservoir reserves in the ground and the expected remaining life of the field and then divide it by the mineral owners' percentage. This approach, however, is very rarely worth it for a mineral owner, however, given the cost and the typical small interest each mineral owner has in the field and/or in the unit.
Hope this helps.
Thank you, Jean. We may be interested in selling our rights at Wilmington. Your input was very helpful, and I appreciate your taking the time to answer. Do you have any recommendations for a reputable buyer/firm? Thanks again!
You, know, Gina, I really don't. There are a lot of mineral buyers out there, of course some reputable and some not. Many of the landmen (men and women who are professionals in mineral rights titles and other issues) on this forum may have some recommendations. If they don't see your reply post you may want to send a new one seeking information. Good luck!