Mineral rights value is based on what a buyer is willing to pay today for your mineral rights.
A lot of mineral owners are trying to figure out how much their mineral rights are worth. They expect to be able to look up the average price per acre for mineral rights or use a mineral rights value calculator to find the answer.
Unfortunately there is only one way to determine how much mineral rights are worth. To get bids from legitimate end buyers.
How much are mineral rights worth?
To determine how much mineral rights are worth, contact legitimate mineral buyers and request a bid. As you gather up bids, you will start to get a clear picture of how much your mineral rights are worth.
At Fraction Royalty, we are mineral buyers who purchase mineral rights. You can get a same day quote from our company. Getting a bid from our company will help you learn more about the value of your mineral rights.
If you are getting letters in the mail, take these letters with a grain of salt. Some mineral buyers send out letters and they are legitimate. Other mineral buyers will send out teaser offers. They just want you to pick up the phone and then they offer you a lower price. There is nothing wrong with reaching out to those buyers who send you letters in the mail. You just need to make sure you verify how much their offer actually is. Don’t rely on the offer they sent you in the mail until you have spoken with them and confirmed the offer.
Your mineral rights are worth what a legitimate buyer is willing to pay today for your mineral rights.
Average Price Per Acre for Mineral Rights
There is no “going rate” or “rule of thumb” for mineral rights value. Each mineral rights ownership is unique. This means that you can’t compare two properties.
A lot of mineral owners assume they can find an average price per acre for mineral rights, determine how many acres they have, and then have a rough idea of the value. The reason this does not work is because the value is based on how much remaining oil and gas is available.
Your mineral rights may have 6 horizontal wells drilled and produced for 10 years, which means the oil and gas has been largely depleted. Your neighbor may have no horizontal wells drilled, but there are plans to drill 6 new wells in the near future. The price per acre you receive is going to be substantially less because most of your oil and gas has already been extracted. Your neighbors price per acre is going to be substantially higher because most of their oil and gas is still available to be extracted.
This is why you can’t use an average price per acre to determine the value of your mineral rights.
How to Calculate Mineral Rights Value
There are three stages of oil and gas production.
1. Non-Leased / Non-Producing: If your mineral rights do not generate any royalty income, and you have not signed and oil and gas lease within the last 5 years, you have non-producing mineral rights.
2. Leased Mineral Rights: If you have signed an oil and gas lease within the last 3 to 5 years, but you do not receive royalty income, you have leased mineral rights.
3. Producing Mineral Rights: If you receive royalty income, you have producing mineral rights.
To calculate the value of mineral rights, you need to understand which stage of production your mineral rights are in. Now that you know which stage of production your mineral rights are in, we can calculate the value of mineral rights.
To calculate the value of mineral rights, use the formulas below.
Non-Producing: The value of your mineral rights will be somewhere between $0 and $1,000/net mineral acre. In many cases, the value will fall in the $0 to $200/acre range.
Leased Mineral Rights: Your mineral rights are worth between 2x to 3x the amount of your lease bonus. For example, if you got a lease bonus of $500/acre, you would sell your mineral rights for $1,000/acre to $1,500/acre.
Producing Mineral Rights: The value of your oil and gas royalties is around 3 years to 6 years times your average royalty check. For example, take the last 3 months of your royalty income and find the average. If the average income is $250/month, the value will be somewhere between $9,000 to $18,000.
Using the information above, you can calculate the value of mineral rights.
Important: Keep in mind that the information provided above is a rule of thumb for mineral rights value. The only way to determine the value of your mineral rights is to get a quote to sell mineral rights.
Ready to find out how much your mineral rights are worth?
Get a free no obligation quote today. After providing us with your last 3 months of royalty statements, our team will quickly put together a formal offer for you to consider. At the very least, a formal offer will give you a data point to consider and help you gain a better understanding of what your mineral rights might be worth.