Figuring out your mineral rights' worth is one of the trickiest things to do as a mineral rights owner. 

After all, it's not a simple, cut-and-dry calculation. Figuring out your minerals' worth usually involves turning to mineral rights buyers, who consider several complex factors to provide a valuation. Plus, it's common for two different mineral buyers to give you vastly different valuations. 

That means coming to a number you're confident about involves a full run-around to several mineral buyers—who will then inevitably try to sell you on why you should sell them your mineral interest.

It's not an ideal situation. 

To help you understand the inner workings of mineral rights valuations and how mineral buyers arrive at a number, we're exploring the different factors that affect them at any given time. 

What factors go into a mineral rights value calculation?

While mineral buyers consider various complex factors, some elements weigh more heavily than others in a mineral rights value calculation. Here are four of the most important influences: 

Production History

Production is one of the most critical factors in a mineral rights valuation. 

Looking at the history of your minerals provides a holistic view of how consistently your wells will continue to produce. Trends over time can indicate whether a well is declining or remaining stable, which impacts potential future value. 

The type of well also matters as part of this conversation, as it impacts production volume. The two types of wells include:

• Vertical Wells are drilled straight into the ground to extract oil. They generally produce oil at a steady pace and require less maintenance than their horizontal counterparts, making them a more cost-effective way to drill and extract minerals.
• Horizontal Wells are a more recent innovation that involves drilling horizontally to access oil or gas in more difficult geographic areas. Horizontal wells are particularly helpful in fracking, which produces oil and gas at a high production rate for 6-9 months but tends to decline drastically afterward. 

Ultimately, the type of well matters because it impacts minerals' production levels. It influences what the well could produce over time, which trickles into your overall minerals' valuation.  

Geography & Geology

Geography and geology are critical factors that determine minerals' worth.

Geography–or where the minerals are located—goes hand-in-hand with the surrounding area’s geology. For instance, geography influences rock porosity, reservoir depth, proximity to producing basins, and other geological structure considerations. 

These geological factors determine how easy it is to access minerals, which can significantly impact operators’ costs and, therefore, minerals’ valuations.  

Surrounding Infrastructure

Geography plays an obvious role in your minerals’ valuation. 

What’s less obvious, however, is the surrounding infrastructure in any given geographical area.

In order for your wells to be serviceable, infrastructure must be in place—like roads, hotels, and restaurants—for operators to complete the work associated with maintaining wells. 

In other words, if a well isn't serviceable, it's less valuable because operational costs will skyrocket if operators must set up temporary infrastructure for themselves. On the contrary, wells located in highly trafficked areas with good surrounding infrastructure cost less to service, making it a more appealing investment.  

Commodity Prices 

Your mineral rights valuation is closely correlated with market factors, as well. 

Whether oil costs $50 or $100 per barrel will influence your minerals' valuation because as prices increase, your minerals become more valuable. 

Additionally, prices impact how oil operators service your wells. When prices are high, operators are more likely to capitalize on the opportunity to earn more from the commodity by sending more resources to service the wells. Because this increases production, high prices tend to mean higher values. 

The Simplest Way to Estimate Your Mineral Valuation 

Accurately calculating minerals' worth requires highly specialized expertise spanning several disciplines, including finance, geology, legal, engineering, managing operators, and much more. That makes it incredibly difficult to calculate your valuation without the help of a specialized team. 

However, if you're looking for a highly simplistic estimate, there is a straightforward calculation. Multiply your last month's royalty check by 30-50 to estimate a potential range you could expect to see from valuation experts. 

Keep in mind that this is a highly simplified way to estimate your minerals' worth. The best way to get a correct assessment is to contact several mineral buyers and collect estimates. You will receive a wide range of valuations, but working with several potential buyers will give you a strong understanding of what different firms value and how easy they could be to work with. 

How to Tap into Your Minerals’ Value Without Selling

Informed, educated mineral rights owners should know their minerals' worth. It's a challenging process, but it's well worth the effort, as it can help you make informed decisions about your mineral rights. 

Determining your minerals’ valuation is the first step to deciding whether to sell or hold your mineral rights. 

For example, it's common for mineral rights owners to sell their mineral interest to cover significant expenses, fund their lifestyles, or simply create a financial safety net. But you should know what your minerals are worth before making such an important financial decision.

But selling isn’t the only way to access liquidity trapped in your mineral rights. 

Frontlands’ Mineral Line of Credit—MLOC—allows mineral owners to borrow against their mineral rights. MLOC works like a credit card, letting you access cash when you need it and paying interest only on what you use. 

MLOC is the smart alternative to selling your minerals. Learn more about applying today.