Who buys non-producing mineral rights?

Non-producing minerals are bought by a much thinner pool than producing royalty: direct buyers taking a long position, a small number of funds that specifically assemble undeveloped acreage in areas they expect to be drilled, and volume mailers who buy them cheaply everywhere and are right often enough. Brokers and marketplaces are usually a poor fit, because there is no cash flow for bidders to compete over.

First, work out which kind of nothing you have

"Non-producing" covers four situations that are worth very different amounts, and the letters you receive will not distinguish between them.

• Unleased and undrilled, in an active area. The most valuable kind. Somebody may want to lease it, and a lease bonus is money you can receive without selling anything. See leasing your minerals.
• Leased but not yet drilled. You have a lease that may expire or may turn into a well. The value depends on the lease terms and how much time is left. See the free lease offer check.
• Held by production somewhere on the unit, but you receive nothing. This is frequently an error rather than a fact, and it is worth checking before you sell. See unclaimed royalties and division orders.
• Genuinely dormant. Old wells plugged, no leasing in decades, no permits nearby. Real, common, and worth something small rather than nothing.

Working out which of these you have is free and we will do it for you whether or not you ever sell anything to us. It also changes the answer more than any negotiation will.

What a buyer of non-producing minerals is actually betting on

With no cash flow, there is no multiple. Price is built from probability, and honest buyers will say so:

1. Will it be drilled, and when? Nearby permits, rig activity, and whether operators are working toward your section. Time matters enormously, because a well in fifteen years is worth a fraction of the same well in three.
2. What would a well pay? Type curves from the nearest analog wells, applied to your net acres and your royalty fraction.
3. Is the title clean? Non-producing tracts are where undivided fractions, unprobated estates, and old severances pile up. That risk is priced in, and it is why an offer can fall between letter and closing.
4. What does the buyer pay to wait? Money tied up in undrilled acreage earns nothing until something happens. That carrying cost is the single biggest reason non-producing prices look low next to producing ones.

Why the first offer here deserves more scrutiny, not less

On a producing royalty, everyone can see the check. Disagreement is about the future, but the starting point is public.

On non-producing minerals there is no public starting point at all, so the spread between a low offer and a fair one is far wider, and an owner has almost no way to sense where in the range they are. That asymmetry is the whole reason list driven mail concentrates on undeveloped tracts.

A per acre number in a letter, arriving before anyone asked you a single question about the tract, is a screen. It is not a valuation, and treating it as one is the most expensive mistake available on this asset.

Three things worth doing before you sell non-producing minerals

1. Check for permits and rigs near your section. Free, and it can change the answer completely. Our well records page shows where to look in twenty states, and Mineral Watch will tell you when something is filed near you.
2. Check whether it should already be paying. A surprising share of "non-producing" minerals are producing minerals with a bad address or a suspense problem attached.
3. Consider leasing instead of selling. A bonus payment now, with the minerals retained, is often better than a small sale, and nobody sending you a purchase offer is going to mention it.

Related

• Who buys mineral rights and who buys royalties
• How much are mineral rights worth
• Inherited mineral rights and transferring them
• Small interests
• Leasing instead of selling
• When not to sell

Berlin Royalties is the trade name of Berlin Resources LLC, a mineral buyer and a landman shop in Tulsa. We buy non-producing minerals, so treat this page as coming from an interested party and check the parts that matter to you.