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Sell · how the price is built

What goes into a mineral offer, and why two offers differ.

A calculated offer is only as good as what goes into it. Here are the eight inputs any serious buyer uses, in the order they matter, the papers that let a screening start from facts instead of guesses, and how to read any price you are given. This page does not calculate a price.

Request a written offerSee what prices have done
Bars stepping down from a benchmark price through regional discount, deductions, and taxes to the royalty an owner receivesBenchmarkHenry Hub, WTIBasisregional discountDeductionsgathering, etc.Taxesseverance, countyYour royaltyon the checkA price starts far from your check.A buyer values the royalty you will actually receive, years ahead.
Illustrative, not to scale. The bars show why a benchmark price on the news and the price on a royalty statement are different numbers.
The two questions that come first
What exactly is owned, and whether it is leased. They decide if there is anything to value.
The most useful document
A royalty statement. It names the operator, wells, decimal, volumes, prices, and deductions.
The honest unit
Per net mineral acre for unleased interests, a multiple of annual royalty for producing ones.

What goes into the price

Eight questions, roughly in the order a buyer asks them. The first two decide whether there is anything to value; the rest decide how much.

What exactly is owned

The fraction of the minerals, or the royalty decimal, under a named tract. Gross tract acres and net mineral acres are shown separately. A royalty decimal is not a mineral fraction, and a tax ticket is not title.

Leased or unleased

An unleased interest is valued on what a lease could bring and whether anyone wants one. A leased interest is valued on its royalty rate, deductions clause, term, and whether the lease is held by production.

Producing or not

A producing interest has royalty statements that show volumes, prices received, and deductions. Those statements are the single most useful document you can share.

The wells and their decline

Shale wells produce most of their lifetime volume in the first years and decline steeply. A check from a two-year-old well will shrink; the price reflects the expected curve, not last month.

Benchmark prices and the basin discount

Henry Hub and WTI set the direction. Appalachian gas sells below Henry Hub, and the gap widens when pipelines are full. A buyer prices the strip ahead, not the spot behind.

Deductions and taxes

Post-production costs, severance tax, and ad valorem tax all come out before you see a check. Two leases with the same royalty rate can pay very differently.

What is happening around the tract

Permits outstanding, recent completions, and which operator is assembling acreage nearby change the odds of future development. That is why the pipeline and operator pages exist.

What other buyers have paid

Recorded mineral deeds in the county carry a declaration of consideration. They are the closest thing to comparable sales, and they are public.

What to have ready

None of these is required. Each one you can share shortens the screening and narrows the assumptions in an indication. Unknown is always an acceptable answer.

Deed book and page

The instrument that created your interest, from the county clerk. If you only have a name and a county, say so; the screening starts there.

Royalty statements

The last twelve months if you have them. They name the operator, the wells, the decimal, the volumes, the prices, and the deductions.

Division order

The operator's statement of your decimal interest in each well or unit. It confirms what the operator thinks you own.

The lease

Or the lease memorandum from the county records. The royalty rate, deductions clause, and term matter more than the bonus you were paid years ago.

Tax tickets

The county assessor's mineral tax ticket shows how the interest is assessed. It is a starting point, not proof of ownership.

Any letter or offer you received

Including the reference code. An offer in hand is useful context, and the comparison only works if both cover the same interest and terms.

How to read a price

  • Per net mineral acreThe usual unit for unleased or non-producing interests. Divide the offer by the net acres it covers.
  • Multiple of annual royaltyThe usual shorthand for producing interests. It only means something next to the decline the buyer assumed.
  • Assumptions are part of the priceAn indication lists what it assumed about ownership, lease status, and production, and what changes if title review finds otherwise.
  • No commission is not the highest priceOne buyer’s calculated offer is not an auction. The Sell page explains how this business earns a return.

Questions owners ask

Can you tell me what my interest is worth without buying it?

The free screening tells you what the records show and whether the interest fits what we buy. A figure comes only as an indication tied to a purchase, because the figure depends on assumptions a buyer is prepared to stand behind. Research from a prospective buyer is not an independent appraisal.

Why do two offers for the same interest differ so much?

Different assumptions about decline, future prices, deductions, and the chance of new wells, and different return targets. Ask each buyer to state its assumptions. An offer that will not is harder to compare, not necessarily worse.

Does nearby drilling raise my price?

It raises the chance of a lease, a unit, or a royalty, which a buyer prices as probability, not certainty. The drilling pipeline and operator pages show what is permitted and who is active near your county.

Is a royalty statement enough to get an offer?

It is enough to start. It shows the decimal and the wells. The deed and the lease still have to be checked before a written offer, because the statement reflects what the operator believes, not what the records prove.