A landman we’ve used in the past is saying that sale value is higher if property is NOT leased. I’m pretty sure I remember M. Barnes saying just the opposite. This landman is going to flip the leases so I’m wondering if that has some bearing on his comments.
jsw
JOHN- think of it as a percentage. If minerals are unleased, you own 100% of any future revenue stream. If the minerals are leased at 1/8th, you get 12,5%. If leased on 1/4, 25%. So minerals that aren’t leased are more valuable than unleased. That is with all other factors being equal, ie location, past production, etc.
Error- so minerals that aren’t leased are more valuable than leased.
It depends. If the minerals are leased and there are permits filed or wells being drilled, then that raises the value considerably. Or if the minerals have been drilled out and the wells have already been producing for many years. The value will be affected by the royalty rate in the lease - 1/8 vs 1/4. Unleased minerals have the potential for a bonus, but that value depends on whether the minerals are in a good area or not. You need to research the leasing, drilling, formation depths, etc in the area where your minerals are located.
All those factors are part of my “all things being equal”.