November 26, 2018

Mineral Rights Value

If you are looking at the worth of your real estate, to purchase new land, or to sell mineral rights, you might be interested in knowing the value before doing so. Below we cover each aspect of what may influence mineral value to help you with determining your own property’s worth. Continue reading to discover exactly what minerals rights are and how to determine their value – based on rule of thumb.

What Are Mineral Rights?

Most times, mineral rights are given to the individual who owns the property in which the minerals are located underneath. Whether it is oil, gas, rocks, or other valuable minerals, owning the mineral rights of the resource typically grants you royalties based on their value. Minerals, particularly oil and gas, can add tremendous value to your property. You may be surprised to find out that the value of the minerals can exceed the rest of the real estate value.

The Value of Mineral Rights

Once you find out if you have mineral rights, you will want to find out what they are worth. Here are a few primary factors to consider when determining the value of your mineral rights:

Cost of Natural Resources ― The fluctuation of gas prices is not only seen at the pump. As a resource owner, you will be subject to the rises and falls of the market. The value of your mineral rights will be dependent on the current price of the resource; therefore, your royalties may not be consistent. Royalties are also subject to change depending on your location and other environmental factors.

West Texas Intermediate (WTI) ― West Texas Intermediate, often referred to in shorthand as WTI, is a particular grade of West Texas crude oil. This specific grade of crude oil is utilized as an agreed-upon benchmark in oil pricing, aligning with the West Texas crude price. In addition to WTI, other oil markers used as important benchmarks include Oman Crude, Dubai Crude, Urals oil, and the OPEC Reference Basket. WTI serves as the underlying commodity of the oil futures contracts of the New York Mercantile Exchange and is mainly refined in the Gulf Coast region and certain parts of the Midwest.

What is West Texas Intermediate (WTI) Used For?

WTI is most commonly used as a benchmark in discussions of oil prices, often referenced alongside the price of Brent crude, which comes from the North Sea. It is extremely useful as a reference price for buyers and sellers of crude oil, as well as in dealings of mineral property rights. Ferrari Energy often utilizes WTI as a factual point of reference to help determine our offers.

There are many types of crude oil, but WTI is one of three primary benchmarks widely agreed upon: WTI, North Sea Brent crude, and Dubai crude. You may often see both WTI and Brent crude used in contrast, with their pricing different called the Brent-WTI spread. Because each of the two crude oil types operates on a unique supply and demand market, each pricing benchmark will most closely reflect the particular characteristics and fundamentals of its market.

WTI and How It Factors into Your Mineral Rights

West Texas Intermediate (WTI) may be used to set fair and accurate pricing of an offer made on your mineral rights.

Looking at the Oil (WTI) Price Chart below you see the fluctuation in oil pricing over a 3-month time and how this can potentially affect the price of your minerals.

If you’re working with Ferrari Energy, your agent will be happy to discuss WTI with you in detail and provide more information about how it specifically relates to your situation.

Help with Determining Your Mineral Rights Value

Whether you think you have valuable minerals in your real estate or want a thorough appraisal of your mineral rights, contact Ferrari Energy. Our expert appraisers will help you understand the worth of your mineral rights throughout the country, particularly in Texas, Oklahoma, Utah, Colorado, Wyoming, or North Dakota.

From buying mineral rights to information about mineral rights, we are happy to help you discover the value of your real estate and what you can do about it.

Reference the following for an up-to-the-minute look at oil prices: