Calculate Oil and Gas Royalties Value in 2021
Do you want to know how to calculate oil and gas royalties value in 2021? This free guide explains everything you need to know about how to value oil and gas royalties in 2021. Many mineral owners who are thinking about selling royalties want to know what the value is. Before you sell oil and gas royalties carefully read this guide so you know how much your royalties are worth.
Average Royalty Payments
If you want to know what your average royalty payments will be, this question is nearly impossible to answer.
There are many different factors affecting oil and gas royalties value. How much your payments will be after a new oil well is drilled can vary a lot. The payout you get can vary based on a few things. The most important factors are:
- How many net acres you own
- Your lease royalty rate
- Number of pooled acres
- Price of Oil and Gas
- Volume of Oil and Gas Produced
If you want to estimate your payout from a new oil well, it’s going to be extremely difficult. The factors we listed above will play a huge role. In addition to these factors, there are a lot more factors that will change how much your oil royalties are worth.
Further down, we provide a free oil royalty calculator that will help you estimate the how much average oil royalty payments are worth. Unfortunately it’s simply not possible to provide an estimate of your average royalty payments when a new well is drilled.
If you have an offer to sell mineral rights and you are trying to figure out whether you should sell, get a free consultation. We can help you understand the offer and whether it’s in the ball park of fair.
How are Oil Royalties Calculated?
If you want to know how are gas royalties calculated it is based on 3 things.
You may have noticed on your check stubs an “owner interest” or “net revenue interest” or a “decimal interest”. The operator will then multiply your interest by the quantity of oil and gas produced and the current price to determine your oil and gas royalty payments.
Your decimal interest, or your share of the oil and gas royalties due to you, is based on these 3 factors:
- Unit Size
- Net Acres Owned
- Lease Royalty Rate
Every operator has this information available. They will look at the unit size, your lease royalty rate, and how many net acres you own to calculate your net decimal interest. They list this number on your check stubs and then pay you accordingly based on what is produced. Operators then use your decimal interest when figuring out how to calculate oil royalties due to you based on production.
How Often Are Gas Royalties Paid?
If you want to know how often are gas royalties are paid it would depend on the operator. A lot of operators will have a minimum amount before they send a check. Some operators do $50 and others pick $100. Until your gas royalties are greater than $50 or $100, they will accumulate with the operator. Once your gas royalties reach that threshold set by the operator, they will cut you a check.
If you don’t get a checks for a few months, and then suddenly get a check for just over $50 or just over $100, that would tell you how often gas royalties are paid by your operator.
A few operators cut checks regardless of the amount. As time goes on, most operators have a minimum check amount so they aren’t cutting $5 checks every month.
What are Oil Royalties Worth?
Now that we have described a bit about how oil and gas royalties work, you may be wondering what your oil royalties are worth. It’s important to understand that the value of oil royalties and gas royalties is based on two things:
Cash Flow Value: We can use an oil royalty calculator to determine the cash flow value. The cash flow value is how much the income stream from producing oil and gas royalties is valued at. In other words, the value of your royalty interest based upon the monthly income it currently generates.
Future Value: What an oil mineral rights royalty calculator won’t tell you is the future value. The cash flow being generated today is great, but what happens when they drill a new oil well? Depending on the location, mineral buyers will sometimes look at what could be produced in the future and assign a value to that. For example, if 3 out of 6 wells have been drilled, a mineral buyer may apply a discounted cash flow analysis to the future drilling. They will then increase their offer to you based upon what might happen in the future.
Below we have provided an oil mineral rights calculator. You can use this oil royalty calculator to estimate the cash flow value of your mineral rights.
Do you have an offer to sell mineral rights? If so, the oil royalty calculator below does not take into account the future value of your mineral rights. If the oil and gas royalties calculator below gives you a value that is lower than your offer, DO NOT accept the offer.
Factors Affecting Oil and Gas Royalties Value
There are many different factors that affect oil and gas royalties value. When you sell oil and gas royalties, buyers are looking at each factor to determine how much they are willing to pay. Each of these factors will play a role in the market value for selling oil and gas royalties. Below are just a few of the factors affecting oil and gas royalties value:
- Average Monthly Income
- Oil Prices
- Decline Curve
- Lease Agreement Terms
- Additional Drilling Opportunities
- State / County of Property
With so many factors affecting oil and gas royalties value, how do you know for sure what your property is worth? The only way to determine exactly what your oil and gas royalties are worth is to list them for sale. When you list your oil royalties for sale and start receiving offers you’ll know what your property is worth.
How to Maximize Oil and Gas Royalties Value
If you want to start receiving offers on your oil and gas royalties, please inquire below. We’ll guide you through the entire process and make it simple to find the best price for your oil and gas royalties. If you want to sell oil and gas royalties, it’s important that you maximize the value when you sell.
At US Mineral Exchange we have a massive network of royalty buyers. When you sell royalties with us you’ll quickly start getting offers on your property. As each offer comes in you’ll be able to evaluate it and compare it to other offers. This allows you to locate best offer a buyer is willing to pay for your property. The best part is that there is no cost to list and we show up front what to expect after you list.
Note: If you have an offer to sell royalties that you are seriously considering, we offer mineral rights auctions that can be completed in just 7 to 14 days! We can nearly always get you a higher price through a mineral rights auction.
If you want to start receiving offers on your oil and gas royalties, please inquire below. We’ll guide you through the entire process and make it simple to find the best price for your oil and gas royalties.
Contact US Mineral Exchange:
If you have questions like what are oil royalties worth, how are oil royalties calculated, or anything related to your oil and gas royalties we’re here to help!
We speak with mineral owners every day and we look forward to hearing from you. Please don’t hesitate to fill out the form below with any questions and our friendly team will respond quickly.
The more information you can provide about your property the better! We can give you a better idea about the value of selling mineral rights if you provide more information. The most important thing we need is for you to answer the questions and provide your state and county.
If you have the required documents to list, providing those is extremely helpful!
Absolutely not! When you inquire at US Mineral Exchange we will not be putting any pressure on you to sell. We will help answer any questions you have whether you are interested in selling or not.
At US Mineral Exchange, we take privacy very seriously. We will NEVER sell your information or use it without your consent. When you send us documentation or tell us about your property, that information does not go outside our company without your consent. Even when you list a property for sale on our website, we strictly control who has access to the information about your listing so that only legitimate buyers will be able to see property details.
Many mineral owners make the mistake of getting an offer and quickly selling. They then accept an offer far below market value because they felt pressure to sell. There is nearly always a better price available.
Imagine you were selling a home. Would you get the best price from a random person who walks up and makes you an offer? No way! Now imagine you list the home on the MLS where thousands of potential buyers know your house is for sale. The key to getting the best price is competition. Our guide to selling mineral rights explains everything.
The reason that so many mineral owners decide to sell mineral rights at US Mineral Exchange is access to our large network of mineral rights buyers. Our goal is to help you get top dollar for selling mineral rights by getting your property in front of a huge audience of buyers. This allows buyers to compete against one another which ensures you get fair market value for selling mineral rights.
There are absolutely no cost to list your property. When you locate a buyer by listing your property with us, we are paid a commission directly by the buyers closing agent. This means you never have any out of pocket expenses ever. We only get paid if we can get you a better price than the current offer you have in hand.