Getting the Most Out of Non-Producing Minerals
One of the major factors that contribute to the value of a mineral estate is whether the minerals are producing or non-producing. As one would expect, minerals that are under production and thus making money are valued much more highly than non-producing minerals that don’t currently generate profit. However, non-producing minerals can still be put up for sale and have the potential to make money for the owner. At The Mineral Auction, we can identify the value of your minerals and market even the more difficult mineral estates.
What Constitutes Valuable Non-Producing Minerals
The value of non-producing minerals is usually determined by a price per net acre multiplier. This represents how much of the land is owned, and how much of that acreage is valuable. In order for this to happen an adequate amount of market data is needed. With the market constantly in flux, it is important to know the ways non-producing minerals can be profitable. Factors that affect the value of non-producing minerals include:
- Production History – If the property has produced before, the value of the land may increase due to the prospective profitability of the land.
- Proximity to producing wells – If the non-producing wells are near operating rigs, then the value of the land can increase.
- The overall geography/geology of the area – A specialist is needed to determine the value of the land itself in order to prove the potential of the land.
The process of valuing non-producing minerals ultimately leads to the “upside potential” of the land, or the improved worth in the near future. The property may be deemed not prospective for operation, and therefore valued minimally, if at all. Despite this, there are many factors that play into the profitability of the minerals, and therefore one should invest time into investigating them.
Once the potential of the mineral estate is determined, it is important to expose the land to a large number of buyers. This is key in making profit off the minerals. The brokers here at The Mineral Auction will do our best to locate the right buyers for your property. To discuss the mineral selling process, contact The Mineral Auction, (512) 698-2802 to learn more about the value of your property and the auction process.