Earlier this year I inherited minerals rights in 24 township, 7n, 7w. I have been multiple offers to sale the land but have no idea where to even start. Just this week i got a notice, that Echo energy has asked for a continuance on this?
Any information on what is going on in this section? I would possibly be interested in selling.
Last minerals sold in July 2018 went for $10,500/NMA X 80 acres (from one LLC to another… purchased from individual 2 weeks before that for $7,500/NMA)… it appears your section is HBP (held by production) by 2 very old wells so not sure what your royalty % is. NOTE: Your section is right next to Continental’s SpringBoard project.
Echo Energy has filed for a horizontal well. Slow down and get informed before you even consider selling. There are a whole bunch of companies out there that send out letters to everyone that has acreage in pending well areas. As you can tell from Don’s comment, many get acreage for lowball amounts and then flip them for higher amounts. I am sure you would rather make the royalty money from good wells or get the higher amount in a sale. If you do decide to sell, then get competitive bids.
Read all the comments in the Grady topic area over the last six months. Get informed! The potential for more than one horizontal well must be factored into your thinking.
First thanks for the information. But that leads to more questions. I know I found a link that showed sales, but now I cant find it. How would I research to see what is selling in this area?
Blockquote July 2018 went for $10,500/NMA X 80 acres (from one LLC to another… purchased from individual 2 weeks before that for $7,500/NMA Blockquote
Next how do I go about getting a valuation on the mineral rights to find out what they might be worth? You inherit a house you have a estimate next week, you get mineral rights and its HUGE process to get it all figured out.
And any other suggestions I am open to ! lol
idocmarket.com Grady website.
Real estate is easier to appraise because you can see the land and the building on it. Lots of experts in that category for value and usage. Mineral rights are harder to appraise because you cannot see what is down there all that accurately. Price of oil and gas changes all the time, flow rates, technology, etc. all change. Certain licensed petroleum engineers can give a professional opinion on the value of a flowing well based upon certain parameters at a certain price at a certain time. How many wells will be drilled? How many reservoirs are there? What is the timing? Those are the harder questions. And there are not as many qualified experts out there. There are several firms in Oklahoma City.
I was wondering if you could message me the name of a petroleum engineer near Blaine County (or anywhere in Oklahoma) that you would recommend. I need an appraisal. Thank you
Can you tell me if you inherit some mineral rights through a trust and 2 yrs later your siblings choose to sell and you don’t, they have a valuation on their minerals for capital gains for tax purposes for the IRS done. Do I have to get my valuation done now if I’m not selling them. I guess I’m asking can I wait to get the valuation done if or when I sell? If I don’t sell my kids will inherit them someday. Don’t you get the evaluation when you sell.Thanks you.
You can “do” your evaluation and time you want, but the evaluation is done for the date of inheritance.
So regardless of whether I sell or die and my kids inherit it, it will still go back to what the valuation was when my dad passed and I inherited it? If I say do the valuation now which will reflect when I inherited it 2 yrs ago will I have to do another one if I ever sell it in the future? Or down the line if I don’t sell and my kid inherit it and I have the original valuation will they still need to have a valuation again if they sell? This is confusing. So if I don’t do it now and then pass it down to my kids ( I never sell) they will still have to have a valuation back to the original one that my dad passed and I inherited it? Because looks like if it’s say it’s worth 100.000 now let’s say and they sold it for 150,000 now and it goes up a lot snd then years pass do the kids who inherit it get to use the original valuation against the one at the end if they would sell for the step up tax for capital gain but they will have to do another one if they do to compare?
Not a lawyer but my understanding from my CPA and trust attorney, you don’t need a valuation until you sell it. The valuation will be based on when you inherited it. The gains (or unlikely, loss) will be the difference between the value when you inherited it and what you sold it for. If you never sell it, you won’t have capital gains. The same goes for your heirs. They will need a value when they sell it, with the value based on when they inherited it, and will be taxed on the difference.
That is exactly what I though if I don’t sell I don’t need a valuation but if they inherit it down the line someday and then decide to sell it they would need a valuation at the time THEY inherited it not when I inherited it, so they really don’t need dads valuation of when I inherited it. Which would mean if I don’t sell then I don’t need it but if do sell later and I have the valuation when I inherited it they will still need another one right when they recurved it from me. . Is there any benefit to me doing it now?
There isn’t any reason I know of. It won’t help you if you don’t sell it and it isn’t of any value to your kids. But, here’s what I don’t know and have wondered about…it will be retrospective or forensic appraisal to look back and figure out the value of a property at a past time. I have wondered (worried) if that might be more expensive at a later date, particularly if it came up after many years or decades. I don’t have an answer but it became a moot point for me. Here’s what solved it for me…When my mother died there was an inventory done with appraisal of all assets including the mineral rights, sent to the State of Oklahoma in the form of a probate tax return. They stopped requiring that some years ago when they repealed the state probate tax. I just learned this a few months ago when I set up a trust. I was able to obtain that appraisal and return from the state. Small miracle. My attorney said that would serve as the valuation basis for when I inherited it if I ever sell it. I have no plans to sell my mineral interest, probably doesn’t matter.
Mine was received through a trust so no valuation my siblings sold their parts and are paying for a valuation I can buy into it for $400.00 otherwise I won’t be given the information. But I didn’t believe I’m going to want to sell, it has been in my family for lots of years my great- grand parents. And I’m hearing new horizontal wells are on the horizon so holding out. Guess for 400.00 I would be prepared if the offer was big enough but I just don’t think I could ever sell.
Your siblings are going to have to pay capital gains for the sale they’re doing now. That capital gain will be based on the difference between the price they sell it for and their evaluation of the property as of the date you all inherited it. Unless you have a reason not to use that valuation as your own valuation, you can probably regard that as the number you’re seeking. I am not a lawyer and am most certainly not giving legal or tax advice here – just suggesting an avenue you might pursue. I will say that in my experience getting a good evaluation becomes more and more difficult as time goes on. If I were in your shoes, I would think in terms of nailing that number down now, at least if it doesn’t involve a cost to you, which my suggestion would not.
Rudy
Rudy you said “That capital gain will be based on the difference between the price they sell it for and their evaluation of the property as of the date you all inherited it.”
Rudy are you saying as of the date you each inherited it. Meaning if I sell I could use my siblings evaluation and if I don’t sell it I won’t have one and they the kids will only get an evaluation for when they the kids inherit it and decided to sell. My sibling evaluation they don’t need. I’m the only one who could use that base if I would sell right
If you sell, you could use your sibling’s appraisal if it goes back to the ancestor’s date of death and how you each inherited. If you pass to your kids, they would need an evaluation as of your date of death. Your siblings evaluation is not useful to them.
Thank you so much M Barnes for your help. Looks like nothing will take place until after March if it still does anyway.