Every offer contains a set of assumptions the buyer did not show you. This works out what they must be, so you can ask about them. It will not tell you the offer is too low, because we cannot know that from a number alone, and anyone who says otherwise is selling you something.
Most offer calculators on mineral buyer websites exist to tell you your offer is too low, because the company running the calculator wants to make you a different one. Ours does not do that, for a straightforward reason: a number on its own cannot tell you whether an offer is fair.
An offer of forty two thousand dollars might be excellent or insulting depending on whether the wells under you are two years into a steep decline or twenty years into a flat tail, whether there are four undrilled benches beneath you or none, and what the buyer assumed about gas prices in 2034. Those are the facts that decide it, and the offer letter almost never contains them.
What a number can do is reveal the arithmetic. If someone offers you fifty times your monthly check, they are assuming something specific about decline and about undrilled upside. Working backwards to those assumptions gives you something concrete to ask about, and a buyer's willingness to answer tells you a great deal about the buyer.
Nearly every offer you receive is a multiple of your recent royalty income. Typically somewhere between 36 and 60 months, which people quote as "three to five years."
That multiple is compensation for decline. The buyer expects the wells to pay less every year, so they discount accordingly. Which means the multiple is only as good as the decline assumption behind it, and the decline assumption depends entirely on facts about your wells:
That last point is the one worth carrying with you. The multiple is not a valuation of your minerals. It is a valuation of your check.
Send us the offer letter and a recent statement. We will tell you what the wells under you are doing, what we think is undrilled, and what we would pay and why, with the components separated rather than blended. If the offer you already hold is better than ours, we will tell you that and explain why. Free, and no obligation of any kind.
Got an Offer Letter? Get a Free ValuationThis tool performs arithmetic on numbers you enter. It is not an appraisal, not an offer, and not financial advice, and it cannot see your wells. Berlin Royalties is a mineral buyer and a landman shop in Tulsa, which means we are a potential counterparty to any sale you make. Treat our tool the way we suggest you treat our offers: check the reasoning.