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Client Reviews

Ward, TX

Rated 5 out of 5
May 6, 2022

The price I received after listing at Texas Royalty Brokers was shocking. I had multiple offers to sell, but I was not sure who to trust. I decided to list and let them walk me through the process. Our family was less concerned about the price and more concerned about not being taken advantage of. We ended up selling for over $600,000 more than the offers we were receiving. On top of that, they walk us through the sales process making sure we understood everything each step of the way. These guys are the real deal and our family is very grateful we found this company.

Sam L.

Winkler, Texas

Rated 5 out of 5
March 24, 2022

My family is extremely grateful that we found Texas Royalty Brokers. After receiving multiple offers to sell, we were ready to accept an offer and then found this company online. We decided to list and see if there were any better offers out there. We ended up selling over 40% higher. Had we simply taken the offer in hand, we would have left so much on the table. I highly recommend this company. They made the process simple and we walked away with more money.

Bethany A.

Glasscock, Texas

Rated 5 out of 5
February 4, 2022

We were trying to sell our mineral rights and getting overwhelmed with offers. We decided to list at Texas Royalty Brokers and let the buyers get into a bidding war. That’s exactly what happened! We ended up selling way higher than the offers we were seeing. Very happy we got a good price here.

Perry S.

Pecos, Texas

Rated 5 out of 5
January 28, 2022

We sold our ranch years ago but held onto the mineral rights. A few new wells were recently drilled and the royalty income was substantial. Once we figured out how much we would save in taxes by selling, it was an easy decision. The price we got was beyond our expectations.

Allen M.

Response from Texas Royalty Brokers

Thank you for the kind review Allen. It was a pleasure working with you and your family.

Midland, Texas

Rated 5 out of 5
November 23, 2021

When our family members sold their mineral rights, we were skeptical because they got a random offer in the mail. We decided to sell mineral rights at Texas Royalty Brokers and we are SO HAPPY that we did. We ended up selling our mineral rights in Midland County Texas for 30% more than our family members received. What they say is true. Competition go us a much better price. Highly recommend.

Ned and Anita H.

Blog Categories

Mineral Rights Value – Updated for 2022

Curious about mineral rights value in 2022?

Mineral rights value is complicated.  There is no simple formula to determine mineral rights value.

We’re going to help you understand everything you need to know about how to value mineral rights in Texas.  After reading this article, you will have a good idea of how mineral rights value is determined.

If you are thinking about selling mineral rights in Texas, DO NOT SELL until you have read the entire article.  If there is one article you should read before selling mineral rights, this is it!

Understanding Mineral Rights Value

The most important thing to understand about mineral rights value in Texas is that there is no way to know the value until you sell.

When you sell a home, you can easily see the approximate value by going to Zillow.com.
When you sell stock, you easily see what the stock price is at CNBC or your favorite broker.
When you sell a car, you can easily check autotrader.com and see what the value is.

If you are selling mineral rights in Texas, there is no way to know the value until you sell.   Why?

The reason is that each mineral rights property is unique.  There are five factors that dramatically impact the value of mineral rights value in Texas.

1. Net Mineral Acres Owned:  The most important factor is how many net mineral acres you own.  You are paid royalty income based on how many net mineral acres you own out of the total unit.  For example, if there is a 640 acre unit and you have 20 net mineral acres, you have just 3.1% of the total acres in the unit.  However, if you have 90 net mineral acres in a 640 acre unit, you have 14% of the unit.  The more of the unit you own, the more you get paid.

2. Royalty Rate:  The royalty rate determines how much of the oil and gas produced gets paid to you after the oil and gas operators takes their share.  The higher the royalty rate, the more money you make.  All other things being equal, someone with a 25% royalty rate is going to get twice as much as someone with a 12.5% royalty rate.

Note:  The net mineral acres owned, royalty rate, and unit size are all used to determine your share of royalty income.

3. Timing: The value of mineral rights is very closely related to the price of oil and/or gas.  Ultimately you own the oil and gas underground.  If the value of that oil and gas goes up or down, the value of what you own goes up or down.  However, it’s not exactly a 1 to 1 relationship.  If oil jumps 25% in a month, mineral buyers are not going to assume it stays 25% higher forever.  Oil and gas prices fluctuate.  The average price from the last 6 to 12 months is a better indicator of the value.  If you sell when oil has been averaging $75/barrel for the last 6 to 12 months, you’re going to get a better price then if you sold when oil was averaging $40/barrel.

4. Royalty Income:  Your current royalty income has a very large impact on the value.  If you are getting consistent royalty income over $2,500+/month, this is going to appeal to a large audience of mineral buyers.  The reason is that mineral buyers get an immediate return on their investment.  If you have very little royalty income, this reduces the demand in most cases.

5. Potential Income:  The last factor is the future upside potential.  This is the hardest factor to estimate!  The question is how much income will be generated in the future and when will that income start?   Some mineral buyers will put $0 value on the future upside.  They only look at current royalty income.  Other buyers are willing to buy a property with $10/month in royalty income and pay $5MM based on what the mineral rights will generate in the future.  This factor alone can cause offers to swing dramatically from one buyer to the next.

There are many other factors that affect the value of mineral rights in Texas.  While those factors are also important, the factors above is what swings the value dramatically from one ownership to the next.

Average Price Per Acre for Mineral Rights

One of the most common questions we get is about the average price per acre for mineral rights.

There is no average price per acre for mineral rights in Texas!

Above, we mentioned those factors that change the value.  Any single factor will dramatically change the price per acre for mineral rights in Texas.  This is why there is no average price per acre for mineral rights.

Let’s look at 3 examples to show why it’s impossible to determine an average price per acre for mineral rights.  Let’s assume these mineral rights are all in the Midland County Texas:

Example 1:  John has 10 acres of mineral rights leased at 25%.  His acreage was drilled in 2005 and they drilled 6 horizontal wells in his 640 acre spacing. Today, his royalty income is about $50/month. John’s 10 acres are worth about $3,000 or $300/net mineral acre.

Example 2: Katie has 10 acres of mineral rights leased at 25%.  Her acreage has 1 old vertical well drilled in 1960.  The operator has a rig on site and they are currently drilling 6 horizontal wells expected to begin producing in the next 6 months. Katie’s 10 acres are worth $200,000 or $20,000/net mineral acre.

Example 3: Anna has 10 acres of mineral rights leased at 12.5%.  Her acreage has 1 old vertical well drilled in 1960.  The operator has a rig on site and they are currently drilling 6 horizontal wells expected to begin producing in the next 6 months. Anna’s 10 acres are worth $100,000 or $10,000/net mineral acre.

The average price per acre for mineral rights in these examples is $10,100.  However, this number means nothing.

If John expected $10,100/acre because he heard his neighbor got that much, he would sorely disappointed.  His oil and gas has already been produced and has very little value left.  If Katie sold for $10,100/acre, she would be selling far below market value because she has a 25% royalty compared to Anna’s 12.5% royalty.

As you can see, the average price per acre for mineral rights in Texas isn’t possible to determine.  Every person’s situation is unique.

MINERAL RIGHTS VALUE IN TEXAS?

Contact us to find out how much your mineral rights are worth.

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Estimating Mineral Rights Value

Is there a way to estimate mineral rights value in Texas? Yes!

While there is no way to determine the exact value of mineral rights, we can estimate the value of mineral rights in Texas.

The estimates of mineral rights value below are just a rule of thumb.  The rule of thumb for mineral rights value is based upon the status of your mineral rights.

Mineral rights fall into 3 categories:

Non-Producing: If there is no active lease on your mineral rights, and no don’t get royalty income, you have non-producing mineral rights.  The rule of thumb for mineral rights value when they are non-producing is $0/acre to $250/acre.  In many cases, the value is $0.  The only time you can expect to get more than $0 is if you have an offer to sell OR you have a recently expired (within the last 12 months) lease.   This acreage is considered pure speculation and has $0 value because it will likely be years (decades) before it produces income.

Leased:  If your acreage has an active lease agreement, you can expect to sell for about 2x to 3x your lease bonus.  For example, if you had 10 net acres and you leased them for $3,000/acre, you would expect to sell mineral rights for about $6,000/acre to $9,000/acre.  If you accepted a 12.5% lease, expect a 2 year pay back.  If you accepted a 25% lease, expect closer to a 3 year pay back.

Producing:  If you have producing mineral rights, this means you get paid royalties on a monthly basis.   Some mineral owners get paid every few months if the value is less than $50/month.   The value of mineral rights that are producing is broken down into two components:

1. Royalty Income Value:  The average monthly income your mineral rights generate has a value.  This value is generally 3 years to 6 years times the 3 month average income.

2. Upside Potential:  If there is space to drill additional wells on your acreage in the future, your mineral rights have additional value in the upside potential.  If/when those wells are drilled, the value of the acreage will be higher.  This value is very subjective and depends on how a mineral buyer evaluates the upside.

The estimated mineral rights values above are just estimates!  If you are curious about estimating mineral rights value for your mineral rights, get a free consultation.  There is no obligation and no pressure!

Calculating Mineral Rights Value

If you want to calculate mineral rights value use our royalty calculator below.  The purpose of this royalty calculator is to show you what producing mineral rights are worth in Texas.

As a general rule of thumb, you can expect your producing royalties to be worth about 3 years to 6 years of your average monthly income.

Using the oil royalty calculator above, you can get a general idea what your producing mineral rights are worth.

Keep in mind that this is only the cash flow component of the value.  Your royalty income alone has value, and that is what this mineral rights value calculator is showing you.

In addition to the cash flow value, your producing royalties may also have upside value.  There is no way to calculate mineral rights value for the upside potential.  Each mineral buyer will run their own analysis.

It’s important to understand that the cash flow value may also be incorrect if you have new wells.

If you have only been receiving royalty income for a few months after new wells were drilled, you have flush production.  This flush production means your royalty income will be extremely high in the first 3 to 5 years of production.  It will rapidly drop off during that time.  If you have new wells that just started producing, the mineral rights value calculator above will not be accurate.

Fair Offer to Sell Mineral Rights

When it comes to mineral rights value in Texas, the most important question is whether you are selling for the best price!

If you have an offer to sell mineral rights, you are probably trying to figure out what the value is so you can determine if the offer is fair.

Important: There is NO WAY to determine whether an offer is fair unless you get competitive bids.

Mineral buyers take advantage of mineral owners on a daily basis.  Mineral buyers know that there is no way for you to figure out the value of mineral rights in Texas.

Mineral buyers will make you offers that are far below market value then increase the offer to make it seem like you negotiated them higher.   They create a false sense of value by starting low and letting you ask for a higher price and then giving it to you.  Do not fall into this trap!

If you have a few offers in hand don’t accept the highest offer you found.  It is nearly always far below market value.  When mineral owners list mineral rights at Texas Royalty Brokers, we consistently help them get 10% to 50% higher prices.  This is due to competition.

Mineral Rights Value – Free Consultation

If you are curious about mineral rights value, we can help.

Our team is happy to answer your questions.  We can do a free analysis of your mineral rights and help you get a better understanding of what the value might be.  There is no way to know for sure until you get competitive bids, but we can help you better understand what mineral rights value in Texas is.

Fill out the contact form below and our team will be in touch shortly.  There is no obligation and no pressure when you get a free consultation with our company.

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