A family member wants to sell their 1/4 share of 1/32nd royalty interest in a 320 ac pooling unit with two producing wells - their share generates about $220.00 per month. I am interested in adding their share to what we already have but don’t know a fair value. Any thoughts?
Thx
Hi there.
IMO a fair value is paying whatever the market would pay for that. In other words, being the highest bidder. I would guess that you don’t want to buy them at the market price, as it’s going to seem really high.
This is the joy of minerals. Everyone will tell you to never sell them at the market price, but the same people would never ever buy them at market price. Because, well, people…shrug.
But if you give me the specific location, I’ll tell you what the market would pay and you can decide if fair seems cool or not.
lol, pretty spot on.
I am going to guess $200k in the blind.
There is no magical formula with the recent volatility in oil and gas prices. There are some very aggressive buyers in the market place today, but even they have become edgy on purchases. Best thing for your family member to do is contact 2 or 3 of these companies and request offers. They should just request an offer and not tell them the expected price. Once they have an offer, you can ask the family member for the option to purchase at the same price. Good luck.
I haven’t used it yet, but Pecanestimate purports to do low cost (~$50) estimates of mineral and royalty interest value, sort of like the Zillow or Kelley Blue Book of minerals. I talked to some folks at their booth at a conference and they seemed to know their stuff when I asked a bunch of pointed questions. Sometimes I have to value small royalty and mineral interests for tax purposes for my job, where we need to figure out a rational value but we know it’s not valuable enough to justify an appraisal), so next time I was going to maybe check them out.