Value of Mineral Rights in McKenzie County North Dakota

Value of Mineral Rights in McKenzie County North Dakota

Determining the value of Mineral Rights in McKenzie County North Dakota can be complicated.  We often compare the calculation of mineral rights to predicting tomorrow’s high and low temperature forecast.  We can certainly get in the ballpark, but to predict the weather exactly is an educated guess at best.

However unpredictable the changing value of mineral rights in McKenzie county North Dakota may be, we can establish some general guidelines to estimate a reasonable base for valuation.

If you are already receiving royalty income, please also be sure and visit the following post for more specific calculation possibilities.

Size Matters

Selling Mineral rights are like selling a business.  The larger the business income the higher sales price the business commands.

For a moment, consider you were looking to purchase mineral rights from a mineral owner.  First, you would place a value on the mineral rights, submit an offer, run title and then proceed with closing and settlement.  Keep in mind that regardless of the size of the acreage you were purchasing, you cannot afford to skip any steps of this process.  The question then becomes, would you rather purchase 10 acres of 100 acres?

The answer is you would rather purchase the 100 acres, because for the same amount of work and cost, you end up with 10 times more.

Large acreage holders, if aware of this fact, will be able to negotiate a higher price than those who with smaller ones.

Market Prices

Current and anticipated oil and gas prices have a significant impact on the value of mineral rights in McKenzie county North Dakota.  Oil and Gas mineral buyers will evaluate your property and forecast future revenue streams based upon NYMEX prices less any regional pricing adjustments.  Let’s look at a hypothetical example.

A McKenzie county mineral owner is looking to sell 100 acres of mineral rights.

Current NYMEX Oil Price = $100 per barrel of crude oil.

For simplicity, let’s assume the buyer has come up with a price of $1,000 dollars an acre offer price (the buyer would have had to run a production estimate based upon wells in the immediate area, established a type curve, estimated reserves, and determined the Net Present Value of the transaction to establish this offer price).

The value of the mineral rights to the buyer would then be $100,000 dollars.   Now consider NYMEX Oil Price drops to $50 per barrel of crude oil.  Should the mineral owner expect half of the original offer?  Absolutely!

**Please note the above example does not account for any discounts Bakken royalty owners receive off NYMEX.  Historically, due to lack of infrastructure and local refining capacity, Bakken prices have seen quite significant deducts off NYMEX pricing.

Location, Location, Location

The most important factor in the value of mineral rights in McKenzie County North Dakota is where exactly your property is located.

Let’s consider the housing market and look at two people living in two different neighborhoods.  The first neighborhood’s entrance is gated with very large ranch style homes and large acreage lots.  The neighborhood directly across the street does not have a gated entrance, contains small rundown homes and just enough land to call it a yard.  Despite being across the street from each other, these homes are miles apart when it comes to value.  Unfortunately, unlike the housing example above, it is not easily determined which neighborhood you live in when it comes to valuing your mineral rights.   The obvious reason is we cannot see what is happening geologically beneath the surface.

Where can I get help?

These are just a few ways mineral values are determined, so if you are looking for the value of mineral rights in McKenzie County North Dakota to sell them, please consider reaching out to us for assistance.

Mineral Owner Inquiry Form

Do you have questions about your mineral rights? We can help! Simply fill out the form below with your questions and we will contact you.

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