I am thinking of selling my mineral rights in Kingfisher County. I want to get the approximate value of it before I attempt to get offers.
How do I determine the value of my property in Kingfisher County?
It’s a big, diverse county. You will need to give a legal description for anyone to give you something to work with.
Legal Description Township: 015N Section: 006 Range: 005W Unit Acreage: 631.47
Is there some standard formula that is used to determine mineral rights value?
You might want to consider a pause on selling. You are just one of at least 100 owners in that section, so you do not have 631.47 acres. You have one horizontal well and at least one more coming. The section to the south of you has seven horizontal wells. Any buyer would probably not offer value for those future royalties.
No, there is not a simple formula for determining value. Fair market value, future value, time value of money, known reservoirs, completion styles, number of potential reservoirs all go into the calculations which are fit for purpose.
Condensate play. So mostly gas. Not really great well results. These 5k laterals are approx 100kbo and 1.5bcf total recovery. The pace at which this gets developed is going to be heavily dependent on the gas price which is currently no bueno. I’m surprised BCE is still running rigs.
When they drill 7 wells a section the wells are worse on average then when they drill 1 well a section. So I wouldn’t expect 7 wells in my section. BCE is still fracking with 1250# and 50bbl/ft same as the 2018 jobs.
Lets just hypothetically say you get 5 more wells at some time in the future and they make say 90kbo and 1.25 bcf because of interference. Say oil averages $65 and gas $3.5. Your future revenues over 40 years per royalty acre are:
= 5*(90000 (65) + 1250000 (3.5)) * .9 (taxes) * 1/(640 * 8) = $8900 per nra
But thats over the next 40 years. And these wells might or might not get drilled. So its probably going to be 1/3 to 1/5 of that today, bird in hand. And then you are probably getting about $12/month per nra from the existing wells. So add 50 months of that in.
$8900/4 + 50 x 12 = $2825 per nra.
Simple standard formula. 
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That is a good simple way to look at it. There is usually a discount for the time value of money. A common one is 10%. Most buyers that have contacted me only offer a discounted value for the current wells and not for future wells. If a rare one does, they had a higher discount factor for the future wells (one reason I said it was not a simple solution). What the market will bear.
Haha. All this time I thought my way of looking at it was complicated 
Discount rates for future cash flows to get a mark/NPV should correlate to risk.
I do agree, giving no value for PUDs is extremely not fair. But a 30 year fixed mortgage is around 7% currently. If you want to use a 10% discount rate to value PUDs that you have no control over and may never get drilled then you might as well skip any math and go with “granddad told me to never sell” because there is no market that will bear that.
Keep in mind that a sale of minerals may trigger capital gains taxes. This is the difference between the “Basis” and the sales price.
Basis is either
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The price you paid for the property, but if you didn’t buy the property then
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If you were gifted the property, then the basis that your grantor had, but if it was inherited,
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The value of the land at the time it was inherited.
You should check with a CPA to determine your basis and whether it would trigger a taxable event (or tax loss) and the taxes you will need to pay.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
GMCFT, you ask a simple question and receive all sorts of responses of which some may not be helpful. If producing, and there is no indication of imminent drilling or activity, about 48 to 60 months of revenue. In other words, if your most recent revenue is about $100/mo, then the minerals could sell for 4800 to $6000. Another way to search for value is to go on okcountyrecords.com and see if you can locate a mineral deed in your section. If so, and if there are documentary stamps paid and it lists the quantum of acres deeded, then you can back into a value. (Now, most mineral deeds say, “all my interest”, so those won’t help.) If the deed convey 10 net mineral acres and they paid $17.00 in documentary stamps, then you can figure it out by calculating $17.00 is 1.50 per $1000 paid, which would be $11,333. If there were ten net acres, then each acre was worth $1,133.33. Now, unfortunately, I may have just added another complicated answer. If there is anticipated drilling, then all of the above is irrelevant, because it would be worth a great deal more. In that situation, try to get several mineral buyers to make you an offer.
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