How is the best way to value minerals I’m considering to purchase from a family member.
Okla_is_OK,
What is the Section-Township-Range (STR)? I can at least let you know what’s going on in the area.
Thank you for the response. I am familiar with the activity in the area as I’m part owner in these minerals currently. We are trying to figure out the value of them if we were to purchase a share of our family members.
Several factors go into evaluating minerals. Are they currently producing? Are there any new wells proposed?
@Okla_Is_OK your question is “how”.
The pure answer as to value is what the net present value is, based on an acceptable discount rate applied to the calculation.
Minerals, stated in the general, are a very imperfect marketplace… about the opposite of residential real estate for instance, where there is a plethora of data and information readily available at near zero cost.
Mineral values are often dependent heavily upon timing. Just ask people who begin getting offers for 10x what they normally receive in the mail. That’s b/c a drilling permit and/or rig just showed up on or nearby the property.
The most primary question to ask is what volume of minerals are at stake… 2 net mineral acres isn’t going to make or break anyone. When the volume and thus $$ begins to get meaningful, you are best served by getting educated. This forum is a great start. If you get the hint that real money is involved, get professional help who has a fiduciary responsibility to YOU and your alone.
Thank you - any suggestions on a fiduciary to use for this situation?
The Directories Tab above lists several engineers that may be able to help you with an evaluation.
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