VALUE DETERMINATION

The absolute best way to determine a value would be to engage an oil and gas engineering firm to calculate a market value based on assumptions about future production and product prices.  These firms are mostly located in the cities you would think of as being in oil and gas country. Houston, Dallas, Tulsa, etc.

However, the results from these studies will give you a range of net present values, but will normally not provide a MARKET VALUE, which is probably what you want.

One could also get an offer or offers from the company operating the lease, from a royalty buyer such or other than TAS Royalty Company, or from an independent investor or investor group.

Co-owners in undivided leases will probable be negotiating at the same time you are, as well as neighbors.  Check with as many of these folks as you can.

Please give me a call if you would like to discuss exactly how we value your property.  Briefly, we take the current volumetric rate of decline and apply that to the current production to get an estimate of future periods' volumes.  This is done separately for oil and gas.  We use as pricing assumptions the futures strip, straight out of the WSJ.  Multiply these volumes and these prices by your decimal interest, and we now have a guesstimate of the future revenue stream, out to an economic limit.  Discount this stream back to today, and poof!  There is our offer. We try to give ourselves an unrisked 10% return, not counting the cost of running the business.  Where we make money is the aggregation of numerous properties to spread the risk between those that do better than our guesstimates and those that do worse.  This diversification makes a "package" of properties worth more than their the sum of their individual valuations.  Internally, we refer to this as the aggregation premium.