Oil and Gas Surrounding Production

Oil and Gas Surrounding Production

One of the key things that can affect the value of mineral rights is the surrounding production.   In oil and gas, surrounding production refers to how the wells that are directly around you produce.   As a mineral owner, you want the wells that surround you to have very high production.  This means that odds are your property is also going to have high production.

The two key influences on the value of mineral rights in the Marcellus is pricing and production.   The value of and oil and gas property is directly affected by Price X Production.   The higher each of these factors are, the higher the value of your property.   As mineral buyers evaluate a property, they will look at both of these to help determine the value.

With the current price of oil down, mineral rights buyers are taking a much closer look at production.  They only want to invest in projects that will have a high amount of production because this will help offset lower oil prices.   If you own mineral rights that are surrounded by high producing properties, this allows you to ask for a premium when you sell mineral rights.

As you can see, oil and gas surrounding production is key to property value.   It’s also important to note that you will sometimes see a huge decrease in value if surrounding production turns out to not be as good as expected.  We have seen a lot of mineral owners who are holding out for more money get burned when the surrounding production was not good and the value decreased substantially.   Holding out can sometimes be worth it, but many times a mineral owner can find themselves in a spot where they left money on the table.

Considering Selling Mineral Rights?

If you are thinking about selling mineral rights, you should ensure that you get the highest value possible.  To do this, it’s important to get your property in front of a lot of buyers.   The best way you can do this is by listing your property with a trusted company like US Mineral Exchange.  They will get your property in front of many buyers who will compete to pay you the highest price.    This allows you to really see what the market is willing to pay and then selecting the highest offer.

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