Decision Analysis
How Do We Determine The Value of Your Mineral Rights?
Our team of geologists and engineers forecast future hydrocarbon production on your properties and the commodity prices for oil, gas, condensate, and natural gas liquids. This takes into account wells that are likely to be drilled in the future. Production and price data is entered into our proprietary economic modeling software that calculates the net present value of future royalty revenue. The result is a final dollar per acre opinion of value for your mineral rights. In the appraisal world, this is referred to as the “income approach”. We also consider comparable sales of mineral rights near your property, however, when valuing mineral rights this approach is often not as accurate as the income approach.
Sign an Oil and Gas Lease? Go With Forced Pooling?
Many mineral owners will have to decide if they want to sign an oil and gas lease or wait to be forced pooled. Forced pooling happens when a regulatory commission, such as the Texas Railroad Commission or the Oklahoma Corporation Commission, defines a drilling and spacing unit and requires all mineral owners within that unit to accept that an oil and gas well will be drilled. Mineral owners often do not know if it is better to sign a lease or be forced pooled. Again, the answer is: it depends. Experts at Petroleum Evaluations Group help mineral owners decide under which conditions they are better off signing a lease or being forced pooled. If they are forced pooled in a state such as Oklahoma, where a mineral owner is given various lease options to choose from, then Petroleum Evaluations Group helps them pick the most beneficial option.
Should A Mineral Owner Participate in The Cost of Drilling a Well?
A mineral owner who is not under a lease agreement always has the choice of participating in the cost of drilling a well on their land. This allows them to claim 100% of their share of oil and gas production. For many mineral owners, this option is prohibitively expensive, but it can be a good way for mineral owners to make a substantial return on their mineral rights. Petroleum Evaluations Group can recommend whether participating in drilling a well would be advantageous to mineral owners and provide an investment analysis for such a decision.
Should You Donate Your Mineral Rights For a Tax Break?
Donating your mineral rights can be a good way to leave an important legacy to a cause or institution you greatly care about. A mineral rights donation counts as a non-cash charitable donation and the IRS permits the mineral owner to receive a substantial tax deduction. In order to claim this tax break, the mineral owner must have the donated mineral rights appraised. Our experts provide fair market value appraisals that follow the Uniform Standards of Professional Appraisal Practice (USPAP) and can be used for such non-cash charitable donations. Before choosing to donate your mineral rights Petroleum Evaluations Group can conduct an analysis to estimate the size of your potential tax deduction in order to decide if this is a reasonable decision for a mineral owner.
Should You Hire a Mineral Rights Broker? List Your Mineral Rights On a Website?
A mineral rights broker is an individual that can help sell your mineral rights. Another option could be to list your mineral rights for sale on mineral rights listing website such as our Mineral Listings page. Before choosing to hire a mineral rights broker or listing your properties on a website Petroleum Evaluations Group can conduct an analysis to estimate how much such a service will cost you and if it is a good option for you.
In Summary
Petroleum Evaluations Group regularly studies questions on behalf of mineral owners and applies analytical research methods to help clients make the best decision possible regarding their mineral rights.
Our technical expertise and objective, third-party perspective equips you with the knowledge necessary to make smart, confident, choices.
If you have questions concerning decision analysis, contact Petroleum Evaluations Group.
Call us at: (281) 609-2728 or
Email us at: info@petroleumevaluationsgroup.com
Mineral owners often have to make decisions regarding their mineral rights. Petroleum Evaluations Group's experts support mineral owner's decision making process. Common questions are:
A lot of mineral owners ask this question and the short answer is: it depends. In reality, this is not a useful question. A much better question is, “At what price does it make more sense to sell my mineral rights than to keep them?” This is at the heart of the Decision Analysis Report that Petroleum Evaluations Group provides mineral owners. Our experts identify if the offers you receive are undervaluing your mineral rights and recommend at what price you are better off selling your mineral rights rather than keeping them. Our article, When to Sell Your Mineral Rights goes into greater detail on this subject. At the end of the day, there is never a bad time to sell your mineral rights, there is just a bad price to sell your mineral rights.