Your Mineral Rights
Valuating Your Mineral Rights
Valuing your minerals is not a one size fits all calculation. Compared to other assets, minerals consider a variety of other factors, including cashflow, payor, location, oil vs. gas, midstream operator, etc. Each buyer looks at the various components differently, assigning different risk values based on their investment thesis. At MineraliQ, we provide a detailed explanation of how your minerals are valued.
This is defined as what is producing today. Looking at what assets currently make up your checks will provide instant clarification on the minimum value of your assets. Many buyers will offer you a multiple of your monthly revenue. The offers will vary based on upon what the buyer thinks the future revenue will be on currently producing assets and the potential for future wells to be drilled on your property. MineraliQ’s portfolio valuation is a revenue-based range, based on what assets we are tracking for you. MineraliQ provides 3 values: low, base, and high. Each valuation is based on industry standard revenue multiples, aimed at reducing risk from location and future drilling potential.
Example equation, assuming 60x cashflow: (last full month revenue) x 12 months x 4 = Low Valuation
Understand that offers may be above or below the valuation range MineraliQ provides. Ask buyers if they are considering any upside in your minerals. Realize that, as the seller, you are in control of the process and do not have to sell if you believe you are being given a low estimate. MineraliQ recommends getting at least three to five estimations prior to choosing your buyer.
This is defined as what might be produced in the future. Many sellers receive offers to buy their minerals when there is activity around their property. Buyers try to buy low and sell high. With MineraliQ, you, as an owner, can stay up to date on activity near or on your properties to better understand upside potential. Upside is calculated using present value formulas based on the risk of a new well being drilled. This is referred to as PV10, PV30, etc. Permits on your asset that are not yet drilled have lower value than a drilled-uncompleted (DUC) or rig within a property. Many buyers know that owners have little insight into where these rigs, DUCs, and permits are and, therefore, can end up underpaying owners. While MineraliQ does not provide a valuation based on future potential we do have professional services that can determine the value of your undrilled mineral estate. MineraliQ also provides access to daily rig, DUC, and permit locations so owners can better understand upside potential. If there is activity around your property, offers should be at the upper range of MineraliQ’s portfolio valuation or much higher. Some mineral owners can receive over 100x their current monthly revenue if their assets are in an active location.
Detailed Portfolio Valuation
For owners that have a mineral interest of any appreciable size, getting a professional evaluation of your asset is important. Like hiring the top real estate agent to sell your house, MineraliQ’s professional services team can provide an evaluation of what your assets are worth. Being able to provide buyers concrete evidence that you understand the value of your mineral estate—what is producing today and its potential tomorrow—will get you top dollar. Buyers are more willing to offer more money to an owner that has all the information on hand because they know they are negotiating with an owner that understands the value of their asset. Even if you do not need a professional evaluation, the tools within MineraliQ will help ensure you are getting top dollar for your assets.