Valuation
The same royalty decimal is worth very different amounts in different states. Here is what actually drives the number, and how ten producing states compare.
What a mineral interest is worth comes down to what it will actually pay out over time, discounted for how long you wait and how sure the payment is. Production history, the formation, the operator, the tax the state takes, and whether anyone plans to drill again all move that number. The rules of thumb people repeat online — some multiple of a monthly royalty check — are anchors, not valuations. They ignore commodity prices, decline rates, operator quality and development potential, which is exactly where most of the value sits.
Prefer to talk it through? Call (432) 400-4602
Production tax is the most underrated input into mineral value. It is a permanent reduction in net royalty every month for the life of the well, and it varies far more between states than most owners realise — from effectively nothing in Pennsylvania and Ohio to roughly ten percent in North Dakota. Two identical royalty decimals on equally productive acreage are simply not worth the same amount on opposite sides of a state line.
| State | What the state takes | Dormancy risk |
|---|---|---|
| Pennsylvania | No severance tax — Act 13 per-well impact fee | Idle interests can lapse |
| Ohio | $0.10 / bbl oil, $0.025 / Mcf gas | Idle interests can lapse |
| Colorado | Tiered 2%–5% of gross income | No lapse statute |
| Texas | 4.6% oil, 7.5% gas + county ad valorem | Idle interests can lapse |
| West Virginia | 5% of gross value + county ad valorem | No lapse statute |
| Wyoming | 6% oil, condensate and gas | Idle interests can lapse |
| Oklahoma | 2% for first 36 months, then 7% | Idle interests can lapse |
| New Mexico | Stacked levies totalling roughly 8% | No lapse statute |
| Montana | Varies by well type and age, up to 9.3% | No lapse statute |
| North Dakota | 5% production + 5% extraction ≈ 10% | Idle interests can lapse |
Severance and production tax rates change with legislation and with well-level exemptions. Verify the current rate against the state agency before relying on it for a valuation.
Powder River oil economics, a 6% severance rate, and a heavy federal-lease footprint make Wyoming value swing hard by county.
Stacked Permian pay, a moderate severance rate, and an annual county ad valorem bill that most owners forget to price in.
Bakken core economics, the heaviest production tax burden in the country, and a dormant mineral statute that can take an idle interest away entirely.
SCOOP and STACK position, a gross production tax that steps from 2% to 7% at month 37, and a pooling process that can change your interest before you act.
Delaware Basin intensity in Lea and Eddy, a stacked tax burden near 8%, and a mineral estate where federal and state ownership dominates.
The only major producing state with no severance tax — and a post-production cost regime that can matter more than the tax ever would.
Wet-gas Marcellus economics, a 5% severance rate, and mineral title fragmented across more generations of heirs than almost anywhere else.
The lowest production tax in the country, prolific Utica gas — and a Dormant Mineral Act that can move an idle interest to the surface owner.
Bakken edge economics, an incentive tax rate that expires, and a state where an idle mineral interest never lapses — whatever you may have read.
DJ Basin concentration in Weld County, a tiered severance rate, and permitting risk that is a genuine valuation input rather than background noise.
Pointer underwrites every tract individually rather than applying a published formula or a fixed multiple. When we send an offer we walk you through the specific factors that moved the number on your property, and if you think we got something wrong, tell us what you are seeing and we will rework it.
If you want the longer version of how an offer gets built and what to do when you think one is low, that is on how we value mineral rights.
There is no per-acre figure that holds across states, or even across counties within a state. Value depends on the net mineral acres you own, your royalty fraction, whether the tract produces, which formation the wells target, how far down the decline curve those wells sit, what the state takes in production tax, and whether an operator plans to drill again. A number quoted without those inputs is describing a different property than yours.
Multiples circulate widely online, and they are anchors rather than valuations. A multiple applied to a check from a well in its first year overstates the asset badly, because early production is the steepest part of the decline curve. The same multiple applied to a twenty-year-old well may understate it. Pointer underwrites each tract individually instead of applying a published multiple.
Yes, in two ways. Production tax is a permanent reduction in net royalty, and it ranges from effectively nothing in Ohio and Pennsylvania to about 10% in North Dakota. Separately, states differ on whether an idle interest can be lost at all. North Dakota and Ohio have dormant mineral acts with self-executing notice procedures, and West Virginia and California provide court-driven routes to terminating a dormant interest. Texas, Oklahoma, Wyoming, New Mexico, Pennsylvania, Montana and Colorado have no such statute — an interest there stays yours indefinitely no matter how long it sits.
In an active area, yes. Undeveloped acreage inside a fairway an operator is actively permitting carries real option value, and we pay for it. Outside an active area the honest answer is that value is uncertain, because development may never arrive. We will make an offer either way and tell you which of those two situations you are in.
The legal description is the essential item — county, section, township and range, or the abstract and survey in Texas. A recent check stub helps because it shows the operator and your decimal interest. If you have the lease or a probate document establishing your ownership, send that too. We can usually come back within 48 hours.
Send the legal description and a recent check stub if you have one. We underwrite the tract and come back with a written offer in 48 hours, at no cost and with no obligation to accept.