Texas valuation
Stacked Permian pay, a moderate severance rate, and an annual county ad valorem bill that most owners forget to price in.
Texas mineral rights are worth more per net mineral acre than those in almost any other state, but the spread within Texas is enormous. A producing royalty interest in the Midland or Delaware Basin core — Midland, Martin, Howard, Reeves, Loving — sits under multiple stacked benches, which means the same surface acre can be drilled three or more separate times, and each new well adds value to the same mineral interest. A tract in a depleted East Texas conventional field with one old well is a different asset entirely. Texas takes 4.6% severance on oil and 7.5% on natural gas, and unlike most producing states it also assesses annual county ad valorem property tax on producing mineral interests, which is a recurring cost owners often overlook when they estimate what their minerals are worth.
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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.
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.
The reason Permian minerals command the prices they do is vertical stacking. In the Midland Basin, operators develop the Wolfcamp A, B and C along with the Spraberry benches; in the Delaware, the Wolfcamp and multiple Bone Spring benches. One mineral acre can therefore be developed repeatedly across a decade or more. When we value Permian minerals we are pricing the wells producing today plus a view on how many benches remain undeveloped underneath. A tract with two producing zones and four undeveloped benches is worth substantially more than production alone suggests.
County-level generalisation breaks down fast in Texas. Loving County consistently ranks among the highest per-well producers in the state, but value falls off sharply toward the basin edges. Within Reeves County, the eastern and western halves have very different well results. The practical consequence is that a valuation needs the actual survey, abstract and section — not just the county — before it means anything.
Texas lease royalty has ranged from an old one-eighth on legacy leases to a quarter or better on recent Permian leases. An owner sitting on a legacy one-eighth lease receives half what a quarter-royalty owner does from identical production. Post-production cost language matters too: whether your lease permits the operator to net back gathering, compression and processing costs against your royalty changes the check materially, and Texas case law — the Heritage Resources line through Burlington Resources and Bluestone v. Randle — has made cost-free language harder to achieve in practice than owners assume.
Texas has both the best-capitalised operators in the country and a long tail of small operators with inconsistent payment records. Minerals held by an operator that pays on time, develops on schedule and has the balance sheet to keep drilling are worth more than geologically identical acreage held by an operator in suspense or in litigation with its royalty owners.
Texas levies severance tax at 4.6% of market value on oil and condensate and 7.5% on natural gas, with marginal-well and high-cost-gas reductions available. The distinctive Texas feature is what comes next: Texas has no state property tax on minerals, but counties assess annual ad valorem tax on producing mineral interests through the county appraisal district. If your minerals produce, you receive a county tax bill every year based on the appraised value of the interest. Many owners who inherited minerals do not realise this until a delinquency notice arrives. For valuation purposes it means a Texas producing interest carries a recurring holding cost that a non-producing interest does not.
What that looks like on $1,000 of gross royalty
On $1,000 of gross oil royalty value, Texas severance at 4.6% takes about $46 — lighter than North Dakota, which takes roughly $100 on the same gross. But the Texas owner then receives an annual county ad valorem bill on the appraised value of the producing interest, which North Dakota does not assess in the same way. Comparing states on severance rate alone gets the answer wrong in both directions.
Statute: Tex. Tax Code §§ 201.052, 202.051 (severance); county ad valorem assessed under Tax Code Title 1. 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.
Texas value concentrates in the Permian core — Midland, Martin, Howard and Glasscock in the Midland Basin; Reeves, Loving and Ward in the Delaware. The Eagle Ford oil window through Karnes, DeWitt, La Salle, Dimmit and Webb carries strong per-well economics. Panola and Harrison anchor Haynesville gas acreage, where value tracks the gas strip more tightly than oil counties track crude.
Non-producing Texas minerals in an active Permian or Eagle Ford area carry genuine option value, and we pay for it. Operators permit years ahead of drilling, and an undeveloped tract inside a unit that an operator is actively building out is worth well more than nothing. Non-producing minerals in counties with no recent permits are a different proposition — we will still quote them, but the number reflects that development may never arrive.
Texas provides no statutory route by which an unused mineral interest reverts to the surface owner. Once severed by deed or reservation, the interest stays with the holder indefinitely, and adverse possession of severed minerals is very difficult because possession of the surface does not run against the mineral owner. For owners this is protective: a century-old reservation is still enforceable. The practical cost is that Texas mineral title fragments across generations without any statutory clean-up mechanism, so tracts routinely arrive with dozens of fractional heirs and gaps in the chain. Curing that through affidavits of heirship or a quiet-title action is usually what stands between an owner and a closing, and title condition affects both the value and the timeline of any sale.
The honest range across Texas is too wide for a per-acre figure to be useful. Producing Permian core royalty and non-producing acreage in a county with no active permits are not the same asset. What determines your number is the net mineral acres, the royalty decimal, which benches are producing, how old those wells are, and what the operator has permitted nearby.
If they produce, generally yes. Texas counties assess annual ad valorem tax on producing mineral interests through the appraisal district, and the bill goes to the owner of record. Non-producing minerals are typically not assessed. This is a real recurring cost and it belongs in any honest valuation of a Texas producing interest.
Yes, materially. A one-eighth royalty owner receives half the revenue that a one-quarter royalty owner receives from identical production. The lease royalty fraction is one of the largest single inputs into what a Texas mineral interest is worth, and it is fixed by the lease rather than by the geology.
In the Permian, several productive formations sit vertically above one another, so operators can drill the same surface acreage multiple times into different zones. Each new well pays the same mineral owner again. Valuing a Permian tract on current production alone ignores the undeveloped benches underneath, which is often where a large share of the value sits.
Send us 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. There is no cost and no obligation to accept it.