The factors that go into determining the value of Oklahoma minerals may seem simple, but how those factors are figured can be somewhat complex. Simply owning land and minerals in Oklahoma doesn’t necessarily mean you’re sitting on a “gold mine”. There’s a lot of misinformation about mineral rights investing on the Internet, so it’s important to speak with an expert to help you make informed decisions about your investments. Here are the main factors that determine the value of mineral rights in Oklahoma.
Location And Activity
The value of Oklahoma minerals is directly related to the location of your property and the activity on or near it. There will always be price fluctuations with oil and gas, but when the demand for drilling in your area is high, the value of your mineral rights will skyrocket as well. It’s entirely possible for a piece of land with 30 acres to be more valuable than a piece of land with 300 acres. It all depends on where the land is located and what drilling options are available in the area.
Royalties
The initial agreement in your lease is also a major determining factor in how valuable your Oklahoma minerals are. Your royalties can be negotiated up front, and it’s this key component in your agreement that states what you will receive as an investor if a well produces any oil or gas. Standard royalties today are around 18.75% in Oklahoma, but can be higher than that in areas producing more.
When approached by an oil and gas operator, you will have the option to choose between three royalty interest and lease bonus options. The higher the royalty interest offered, the less the lease bonus. This also works the other way around. At Eckard Land & Acquisition, we always choose the higher royalty interest because we believe the long-term payoff is exponential as more oil and gas wells are drilled. Working with an expert to negotiate your royalties will go a long way in maximizing the value of your Oklahoma minerals.
Producing vs. Non-Producing Mineral Rights
Producing minerals rights are always going to be more valuable than non-producing mineral rights at that time. If you’re receiving checks in the mail regularly, then it’s a clear indication you have producing minerals and can determine their value accordingly. Mineral buyers will also evaluate your mineral location within a particular drilling unit. If a well is drilled on a 1,280 acre drilling unit (across 2 Sections), your revenue interest from the well will be based on which Section your minerals are located. In other words, if the well drills through Section #1, but not all the way through Section #2, then Section #2 will receive less due to extracting less minerals. Thus, we don’t consider Oklahoma a true forced-pooling state, where all mineral owners in a drilling unit have the same per-acre ownership interest (for example, North Dakota).
However, the tricky part of determining the value of mineral rights comes with non-producing minerals. Any mineral rights investing endeavor is risky when purchasing non-producing minerals since you’re making an investment based on future potential. Investors are sometimes able to buy for a lower price, but there’s no guarantee they will ever make any money from the investment.
At Eckard Land & Acquisition, the most common question we get asked is “what are mineral rights worth in Oklahoma?” As you can see, there’s no simple answer, and the value varies tremendously. These are only the main factors that begin the discussion of the value of Oklahoma minerals, but we will research every potential investment thoroughly for our clients. Our objective is to help you maximize the value of your investment, and we will cover all bases to do so. Don’t hesitate to contact us if you have any questions at all surrounding the potential value of mineral rights.
