We conduct a relatively simple process to evaluate your interest and provide you with a prompt offer. We use your royalty income as a component in the valuation calculation and can make you a general offer based on a review of your last two or three royalty checks. We may also look at the following factors to formulate an offer:
Current production – If a well or lease produces at relatively high rates, then the future life of the well will probably be longer; therefore, the current value would be greater than for properties with lower overall production. If a well or lease is producing at economically marginal rates for the operator, the future life of the well or lease may be in question, thus possibly decreasing the current value.
Current prices – We generally value properties based on current prices. If these change, the value of the royalty interest may go up or down.
Historical production – Frequently, a graph showing the well or lease production to date will allow projections of the future production decline. We use such projections when evaluating royalty interests.
Tax rates – Severance and property taxes may be high, low, or nonexistent in the State in which your interest lies, and these may affect value.
Location – Like all energy producing wells, the production decline is not “one-size-fits-all”. If your interest is under a well that is declining faster than others, the valuation may be affected.
If you have any questions about your royalty interest, we would be happy to speak with you.