We have inherited mineral rights on 25 acres in Weld County. There is a current lifetime lease with 15% royalty. Currently a shut in well so getting the minimum to hold the lease. Getting offers to buy. We are now faced with paying for an appraisal to get a starting value for Capital Gains purposes (quotes have come in from $9k to $25K for an appraisal). Current offer is as high as $7K per acre. There are 4 of us that never agree on anything!
Several thoughts.
-If you share the section, township and range, then forum members can comment on the activity. Probably why you are getting the offers. You may be getting horizontal wells in the future. Always good to get the most information you can before making a decision.
-Pending the upcoming activity, you may not want to sell
-Depending upon how you inherited, you each may be able to make your own decision. Those who want to keep can keep, those that want to sell can sell their own portion
-The estate could pay for the appraisal. Or you might not need to do an appraisal since the sales price minus step up value is what the capital gains is based upon. Your step up value at the time of inheriting will usually be higher than what the ancestor’s original value would have been. If you just inherited and sold quickly, then there may not be much in capital gains. Those estimates sound a bit high to do an appraisal, but depends upon the location.
The information on the property in Weld County Colorado: Section 31, Township 2 North, Range 68 West The property has been mined for gravel and has had a pump on the property at one time. The well is a shut in well, no royalties at this time. The company is paying yearly to keep the lease, it is a lifetime lease with no ability to negotiate as long as they keep making the minimum payment per year to keep the lease. The appraisal would be for a step up value as my parents have recently passed. If we do not sell soon we do need to get a value for the step up basis. As for appraisals yes, very high. I have contacted 2 and one was referred to by someone that did another appraisal. It seems Colorado appraisals are high. Thank you for the input
Are you on the East side or the West side of that section? The East side has about 10-11 horizontal wells. The West side has older wells, but room for quite a few horizontal wells. That might be why you are getting offers.
[quote=“bsmranch, post:3, topic:77581”] Section 31, Township 2 North, Range 68 West [/quote]a
We are on the west side. And I also heard there is a plan on the docket, I think that is what he said, but could take 3 years to approve. Not sure if I know how to look for plans. My knowledge of Mineral rights is very limited.