The typical landowner is not all that interested in their mineral rights until an oil company approaches him or her to lease them! At this point, getting educated about what you own and why you are being offered a lease becomes crucial. This is why the Tower Rock Oil & Gas Service exists: we are The Rights Resource and can help you make informed decisions through education and awareness. Oil companies lease minerals because they believe there is oil and gas to be found there. Once a lease is successfully negotiated between the mineral owner and the oil company, a royalty is created which entitles the mineral owner to a percentage of the value of the oil and gas sold once a well is drilled and starts to produce. Please contact us and we will be glad to provide you with additional reading material that would be helpful in your lease negotiation.

In many cases, mineral rights have been severed from the surface and often are owned by various individuals or entities. This fractionalization occurs when minerals are inherited and/or sold. At any point in time you can sell all or a portion of your minerals.

The value of these mineral rights vary by:

 

Producing vs. Non-producing Mineral Rights

Producing mineral rights that generate monthly revenue are typically more valuable than non-producing minerals. The volumes of oil and gas being produced and the rate at which those rates are declining on a monthly basis are the primary factors in determining the value of a producing property. These properties are evaluated by performing a decline-curve analysis on the production which yields a discounted cash flow calculation estimating what type of return an investor might expect given price expectations and other economic variables.

Non-producing mineral rights have no current production and therefore no cash flow associated with them. They are typically less valuable than producing minerals because they are valued on their very unproven potential. The risk involved with keeping them can many times outweigh the serendipity involved with owning them when the right offer is presented. Valuing these types of minerals is very subjective and determining whether to sell them or not is a very personal decision.

Whether your property is producing or non-producing, let Tower Rock Oil & Gas help you make the most informed decision possible. Contact us and let us be your rights resource!