5 Tips for Minerals Owners
We asked our President, Craig Kaiser, what he thought the five most important things for a mineral owner to know when trying to understand what their oil and gas property is worth. Here is what he said…
1. Understand Your Ownership
Check your mineral deed to fully understand what belongs to you. Read, re-read and seek out clarification if needed. If you lease your minerals, know the terms of the agreement so you understand what you will earn and what you are giving up. Lease terms are negotiable so ask for what you want.
Need to know how to understand your mineral deed? Read and use our helpful guide located here.
2. Past Revenues Do Not Reflect Future Value
Previous royalty checks are not a measure of how much your minerals are worth in the future.
Calculations of royalty payments are based off of your interest in the revenues from producing wells. Calculations of payments are from historic production., however, future value can radically change with commodity prices and drilling activity which depends on the Organization of the Petroleum Exporting Countries, and worldwide economics.
3. Geology is Key. Your Neighbors Rock May be Different
A nearby sales or lease price is not a measure of what your minerals are worth.
Rather, geology is a key driver in mineral value. Geology can change drastically within a short distance, which means different mineral value. Although many lease offers are based on royalty checks, know that this is not an accurate way to value mineral acreage. Do not allow a neighboring sales price to impact your negotiations.
4. Drilling Activity. It Can Make You or Break You
If you see drilling rigs popping up around your acreage, know that this increased activity may impact the value of your minerals. When drilled wells are highly productive, your mineral value will most likely increase. If a new well performs poorly or is non-productive, your mineral value may decrease.
Do you want to view your property? Check out our map.
5. “Fair” Offers Are Not Always Fair
There are educated interpretations and technical variability when determining mineral value. As a result, the best chance of getting the most from your mineral asset is to understand what factors can change the value of your minerals and have an up-to-date valuation before negotiating, selling, or leasing your minerals.
Although oil and gas drilling allows mineral owners to capitalize on their assets, not every owner is going to be a millionaire. Enter discussions with realistic expectations so you can capitalize on good sale/lease opportunities.
Call us to learn more about how to post your property on our map.
Born into an an oilfield family, Craig was raised in a small, rural town in Eastern Colorado. He has many friends and family members who are mineral owners themselves and he understands how important mineral rights are to working class families.
Craig holds a BSc in Geoscience from Chadron State University and an MSc in Petroleum Geology from the Colorado School of Mines. His work experience spans both the oil and mining industries where he has worked for over 12 years evaluating and managing assets.
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