Value of Oil and Gas Royalties in Texas
Before you sell royalties, it’s helpful to understand the value of oil and gas royalties in Texas. Our goal is to help royalty owners understand everything about their royalties. As a royalty owner, you can make better decisions that help maximize the value when you sell if you know what your property is worth. We’ve been helping royalty owners for years by helping them better understand the value of oil and gas royalties in Texas.
What are Oil and Gas Royalties
For most people, oil and gas royalties are just checks that show up in the mail each month! However, it’s helpful to understand what the checks are for when you are trying to understand the value. In the most simple form, oil and gas royalties are paid to you based on your share of the production in a well. The calculation to determine your share is complicated so we’ll keep it basic! The amount you receive each month from your royalty check is primarily based on two factors:
1. The amount of oil and gas produced from the well
2. The current market price of the oil and gas being produced
When either of these two factors changes, it will cause the value of oil and gas royalties in Texas to change too! With the recent drop in oil prices, you may have noticed that your oil royalty checks have been decreasing. This is because the market price has gone down so the production isn’t worth as much.
Estimating Oil and Gas Royalties Value
Let’s just cut to the chase! Tell me how much my oil and gas royalties are worth!
Fortunately, we can quickly help you estimate the value of oil and gas royalties in Texas. All you need to know is the average amount you receive each month. Let’s pretend that you get $1,000 each month on average. Using the oil royalty calculator below, you can quickly see that your oil royalties are worth between $48,000 and $72,000!
When you are trying to calculate the value of oil and gas royalties in Texas, the best way to get an accurate estimate is to use the most recent 3 months of check stubs. The reason is that the price of oil changes over time so using the most recent 3 months of check stubs increases the accuracy of the estimate. It’s also important to remember that the estimate above is truly just an estimate! You might actually receive substantially more for selling oil royalties in Texas.
Factors Affecting Oil and Gas Royalties Value
If you want to take a realistic look at the value of oil and gas royalties in Texas, you need to carefully consider all of the factors that affect value. Each of these factors will play an independent role in the total value you receive for selling royalties. While every buyer places a different emphasis on each of the factors below, all are a factor that plays into how much your royalties are worth.
Oil Prices: Since the price of oil and gas is a key factor in how much you receive each month, it makes sense that mineral rights buyers are going to look at oil prices to determine how much value to place on your oil and gas royalties. As the price moves up or down, it causes buyers to be more or less aggressive in how much they are willing to spend.
Surrounding Production: The oil and gas being produced in the immediate area around your property plays a role in the value. The reason is that it will provide insight into how much oil and gas your well(s) are likely to produce.
Additional Production Potential: If it’s possible that an operator could drill additional wells on your mineral rights or if the existing well(s) could be recompleted to increased production, a buyer may place a significantly higher value on your royalties. Many buyers have a long term investment outlook so they are willing to own the property for a long period of time just based on the chance that more oil and gas could be produced in the future.
Operator: Not all oil and gas operators in Texas are created equal! If you have been leased and have existing production from one of the major oil and gas operators, a buyer will play a small premium on your property over some of the smaller operators. Large operators have more capital available and are more likely to drill additional wells or recomplete wells for additional production.
Royalty Buyers: Not all royalty buyers will place the same value on your property. There are a significant number of royalty buyers out there who make substantial money by paying the least amount of money possible. They succeed in doing this by finding royalty owners who don’t understand the value of their oil and gas royalties in Texas. They convince them to sell oil and gas royalties far below market value and make significant money in the process. Their main goal is to quickly purchase your property before you evaluate all your options.
How to Get Maximum Value for Selling Oil and Gas Royalties
If you are like most royalty owners, you are interested in getting the highest possible value when you sell oil and gas royalties. The best part about selling oil and gas royalties in Texas is that there is strong demand for your property. There are a lot of buyers in the market who like to buy oil and gas royalties. This means you are in a position of power when you decide to sell. With a lot of buyers in the market, you should be able to get multiple offers and then decide which one meets your needs.
This is where most royalty owners make a huge mistake! Instead of getting maximum value for selling royalties, they quickly sell to the first buyer who makes them an offer. The reason this is such a big mistake is because the first offer almost never represents the trust value of oil and gas royalties. To maximize value, you need to consider multiple offers from multiple oil royalty buyers before you accept an offer. This allows you to fully understand what the current market is willing to pay for your property.
Let’s look at a quick example. If you are currently receiving $1,000/month, the calculator above estimated you would receive between $48,000 and $72,000. You decide to sell your royalties and put them on the market. You quickly get an offer for $52,000. Should you accept that offer? Absolutely not! The reason is that you only have one piece of information. One buyer is willing to pay $52,000, but what are the other buyers willing to pay?
If you were to wait for additional offers, you would likely see offers like the ones below:
As you can see, the offers are all over the place! However, you can see that $63,000 is the best offer you received. That’s $11,000 more than your initial offer! If you would have sold for $52,000 you would have left a lot of money on the table that could have gone into your pocket. That’s why it’s so important to get multiple offers and really see what the market is willing to pay.
It’s worth noting that the worst offer in the example above was just $28,000. This happens because some buyers constantly low ball their offers looking for a royalty owner who doesn’t understand the value of their property. They hope you will quickly sell to them and they can make a significant property. This is why multiple offers are so important. It allows you to quickly judge how much your property is really worth.
How to get Multiple Offers
At Sell Texas Royalties, we are a family based company focused on helping you maximize the value of oil and gas royalties in Texas. We do this by connecting you to multiple royalty buyers. We work with a huge network of royalty buyers from all over the United States who pay a premium for oil and gas royalties. When royalty owners work with us, we usually get them an average of 7.8 offers! This give you a lot of options to consider when you sell royalties in Texas.
The best part about working with Sell Texas Royalties is that it’s truly a risk free option to see what your royalties are worth. You can quickly get offers on your property, but you are under no obligation to accept any offer! If you don’t like an offer, simply reject it and we’ll keep working to find a buyer who can meet your needs. If you do find an offer you like, there’s no cost at all for using our service. Buyers pay us a small fee for helping them locate a royalty owner so you don’t pay a dime when you use our large network for buyers to see what the market is willing to pay.
If you are interested in selling oil and gas royalties in Texas, or if you simply have questions, fill out the form below. We speak with mineral owners every day and we look forward to hearing from you!