How Minerals Are Appraised
A formal appraisal and a buyer's offer are built from overlapping data but answer two different questions.
Owners sometimes ask whether they should commission a formal mineral appraisal before selling. It is a fair question, and the honest answer depends on why you need the number. Below is how a certified appraisal and our own underwriting differ, so you can decide which one — or both — makes sense for your situation.
What a formal appraisal is built for
A certified mineral appraisal, typically prepared by a petroleum engineer or a credentialed appraiser, is built to withstand scrutiny for a specific external purpose: an estate valuation for the IRS, a divorce settlement, a gift-tax filing, or a dispute among heirs. It follows a defined methodology, cites its assumptions, and produces a report meant to stand on its own in front of an accountant, an attorney, or a court. That rigor costs money and takes time, generally weeks, and the fee is due whether or not the interest ever sells.
If you need documentation for a legal or tax purpose, a formal appraisal from a qualified petroleum engineer is the right tool, and we are not a substitute for one. We are a buyer, not a licensed appraiser, and we would tell any owner asking for that kind of report to go get it independently. Your CPA or attorney can typically point you to someone qualified for the specific filing you need.
What our underwriting is built for
Our process answers a narrower question: what would we actually pay to acquire this interest today, given current production or offset activity, decline behavior, and how the interest fits what we are positioned to hold. It draws on the same underlying data — production history, well spacing, operator activity, comparable transactions — but it is built for speed and for a transaction, not for a standalone report to hand a third party.
That means our number is an offer, not a certified valuation. It reflects what we are willing to pay this week, which can move with commodity pricing, offset drilling news, or our own current portfolio needs, in a way a static appraisal report does not need to. We tell owners this plainly so nobody mistakes a fast, transaction-ready number for a document meant to survive a court or an audit.
Where the methods actually overlap
Both approaches lean on decline curve analysis for producing wells, discounted cash flow projections, and comparable sales or lease data for undeveloped acreage. Both need accurate ownership documentation and production history to work from. The difference is mostly in output and audience: a report built to satisfy a tax authority or a court, versus a number built to close a purchase within days or weeks.
If you already have a recent formal appraisal, send it along. It gives us a useful cross-check and can speed up our own review, even though our offer will still reflect current market conditions rather than the report's valuation date.
When it makes sense to get both
If the sale is tied to an estate settlement, a divorce, or a dispute among co-owners, getting an independent formal appraisal alongside any purchase offer is often the more defensible path, and worth discussing with your attorney. For a straightforward sale where you simply want liquidity, our underwriting and offer typically move faster and without the appraisal fee, since you are not paying for a report you do not otherwise need.
Questions Owners Ask the Acquisition Desk
Is your offer the same as a formal appraisal value?
No. Our offer reflects what we would pay today in a purchase transaction. A formal appraisal is a certified valuation prepared for a specific legal or tax purpose, typically by a licensed petroleum engineer.
Can I use your offer as documentation for the IRS or a court?
We would not recommend it. For estate, tax, or legal documentation, a formal appraisal from a qualified professional is the appropriate tool, and your attorney or CPA can advise on which one your situation requires.
Do you charge for a preliminary valuation?
No, our review of your documents and initial range does not carry a fee. A formal, certified appraisal from an independent engineer typically does.
Will you look at an appraisal I already have?
Yes. A recent formal appraisal is useful context and can speed up our review, though our offer will still be based on current activity and pricing rather than the appraisal's valuation date.
How old can an appraisal be before it stops being useful to your review?
Commodity pricing and offset activity move fast enough that an appraisal more than a year or two old is mostly useful for its underlying production and title data, not its final valuation figure. We would still re-underwrite off current numbers.
Who typically pays for a formal appraisal?
Whoever needs the documentation for their own purpose, usually the estate, the owner, or an attorney handling a dispute. It is not something a buyer like us commissions or covers.
Want a range built from your statements, acreage, lease, activity, and ownership records?
Send the county and state, owner name, operator or payor, recent statement, deed reference, lease, division order, probate record, or written offer you have.