I’m in the middle of an portability estate return. Part of the process is needing my mineral rights appraised. These wells don’t give much revenue, so I hate spending a fortune on this appraisal.
Any ideas of how to approach an appraisal? I’m in Texas, but all the mineral rights are in Oklahoma.
Thanks!
Have you asked a mineral appraiser (or three) to give you a quote? You’ll find a range, especially since the profession tends to be higher-skill and therefore an even broader range, but if it’s a small, compact portfolio it should be a quick job that can be right-sized to your needs. Grady county can have some interesting areas where activity might increase the complexity, but nothing Permian-levels.
DJayne:
If it were me, I would take the past 12 months worth of production revenue, divide by 12 for a monthly average. Then multiply times 60 (being 5 years worth) for a total value. Then you can divide this by the number of acres to get a price per acre. The IRS used to use 5 years. That may have changed. You don’t have to take into account any offset acreage, zones not producing, etc., only what current revenue is. If there is no production, you can just about use any number you want. Nobody can contest that. Good Luck.
What if current production is only yielding natural gas?
In the past, natural gas was often evaluated at seven years production. However, that was for conventional wells with typical decline curves. If you have horizontal wells, they probably need a professional look as the first four years are highly skewed to the high production side and the next four decades may be fairly low in production.
I am so disheartened. Thank you!
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