Your search on valuing mineral rights has brought you here and we would like to welcome you to the place wherein lies all the answers.
So, what are the value of your mineral rights?
The process of valuing mineral rights is difficult even for industry professionals trained in the field. There is not an easy way to find an exact answer to your question, but we can certainly provide you much needed guidance.
(For those of you contemplating selling your mineral rights or leasing your mineral rights, skip to the bottom of the section to find the best way)
No Reliable Public Information
Your neighbor exaggerates their lease bonus and royalty percentage because they are not confident in their own deal. The oil companies refuse to tell you how much they are willing to pay for fear of “blowing up” the area. And Internet resources will tell you how much your mineral rights are worth with a “top dollar” offer immediately following. We bet you have already discovered the difficulty in finding public information about sales or leasing in your immediate area. It just isn’t available.
Location
Location, Location, Location. The absolutely hands down most important factor in the value of your mineral rights is where 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.
Timing
As you evaluate what mineral rights are worth, you may hear from neighbors who leased or sold a few years ago. You may have also leased a property in the past and now want to lease the property again. We hear from mineral owners all the time who got $X amount a few years ago, and expect to get something similar again. Unfortunately the oil and gas mineral market moves much quicker and the prices from even a year or two ago are largely irrelevant. This is important for two reasons:
1. You may have expectations that are much higher than current market prices. If you previously leased your property for $1,000/acre and now operators are only leasing for $500/acre, you may be seeking too much for your property and never get a lease.
2. You may have expectations of getting the same $1,000/acre you received in the past, but the area you are in has experienced a dramatic increase in prices. You may be willing to lease for $1,000/acre when the current leasing rates are $2,000+/acre. By simply looking for what you have received in the past you may be leaving money on the table by not valuing mineral rights for what they are worth today.
Common Industry Practice
Another reason why it’s very difficult to value mineral rights is the industry does not want you to know how much your minerals are worth. The industry will make every effort to hide the price paid to either lease mineral rights or sell mineral rights. Oil and gas companies do not wish to disclose higher prices paid to one landowner because it makes it harder to negotiate with other land owners. Mineral buyers just want to pay as little as possible.
By keeping prices private, the industry hides the potential value of mineral properties from owners helping the industry pay less on future deals. This reduces the industry’s cost of operations and puts more money in their pocket not yours.
Best way of Valuing Mineral Rights
Obviously there are many challenges when valuing mineral rights and we have touched on a few key ones here.
So how do you determine your mineral rights value?
The best way is to work with industry professionals who have access to specific information about your area and can also get your property in front of thousands of pre-registered leads and industry contacts. Evaluating your property this way allows the market to determine how much your property is worth so that you can achieve the highest value for your mineral rights. When buyers compete to purchase your property, this drives the prices higher ensuring that you get the highest price possible for your minerals and royalties. And with the tools and resources some in the industry have, waiting to be approached for a lease on your minerals is no longer necessary.
We recommend listing your mineral rights with US Mineral Exchange. They provide mineral owners with access to thousands of buyers and lessees across the United States who compete for your property. Unlike other sites, US Mineral Exchange actively markets your property. In addition, they are knowledgeable about the demand in an area and can negotiate the best price for your mineral rights. There is not a cost to list and no out of pocket sales commissions ever so you have nothing to lose.
