Last Updated: February 4, 2019

What is the Current Value of Mineral Rights?

Are you interested in tracking the value of your mineral rights over time? Updated regularly, the Shale Marketplace Mineral Rights Price Index (the “SM MRPI”) is the only index tracking the value of mineral rights in the United States. Shale Marketplace has two indexes, one covering West Texas and the other covering North Dakota, Wyoming, and Colorado.

  • The SM MRPI-West Texas is based on transaction data from hundreds of sales of mineral rights in West Texas since January 2016.
  • The SM MRPI-North Dakota, Wyoming, and Colorado is based on hundreds of sales of mineral rights in these states since September 2014 (the good old days, when oil traded well over $100 per barrel).

Our data for each area is standardized to account for differences in royalty rates, locations, and current production. Each month, a new index value is calculated and then published on this page by Shale Marketplace.

West Texas North Dakota / Wyoming / Colorado
  
The following counties are included in this index:

  • Texas: Reeves, Loving, Ward, Pecos, Midland, Martin, Howard, Glasscock, Upton, and Reagan Counties, TX
  • New Mexico: Lea and Eddy Counties, NM
The following counties are included in this index:

  • North Dakota: McKenzie, Dunn, Williams, and Mountrail Counties, ND
  • Wyoming: Converse and Campbell Counties, WY
  • Colorado: Weld County, CO

Read below for more details about each index.

Shale Marketplace Mineral Rights Price Index – West Texas

 

Prices Now Above Previous All-Time Highs

It continues to be a great time to be a mineral rights owner in West Texas. Seemingly nothing can slow down the continued slow price appreciation that continues in West Texas and Southeast New Mexico, not even the recent significant decline in oil prices.  This is particularly true if your mineral rights are located in one or more of the following counties, where Shale Marketplace has seen some of the highest prices: Reeves, Loving, Ward, or Pecos Counties in Texas and Lea and Eddy Counties in New Mexico. These counties constitute an area called the “Delaware Basin.” Another great area to own is in one of the following counties: Midland, Martin, Howard, Glasscock, Upton, or Reagan Counties in Texas. These counties constitute an area called the “Midland Basin,” and prices in these counties have also surged.

Prices Increase 2.4% in January 2019

The chart below shows trends in mineral rights prices in West Texas and New Mexico since the index began in January 2016.

   

The chart below is a subset of the chart above, showing only mineral rights price trends in West Texas and New Mexico over the past 12 months.

Commentary – West Texas

In January 2019, the average selling price of mineral rights in Reeves, Loving, Ward, and Pecos Counties in Texas and Eddy and Lea County, New Mexico increased by 2.4% from the previous month. As of today, the Shale Marketplace Mineral Rights Price Index West Texas now stands at 286.7, a new all-time high and 1.1% above its previous record of 284 in April 2018.  This price level means that, if you owned $10,000 of minerals in West Texas on January 1, 2016, those same minerals are now worth $28,670, a gain of 186.7% in only three years!

Highlights from this month:

  • Prices Up 2.4% Year-to-Date and Up 6% in last 12 months
  • Transaction Volume Continues to be Strong
  • Despite Continued Drop in Oil Prices, Prices Are Now At All-Time Highs
Price Increases Continue

Ninth Consecutive Month of Steady Price Increases. Prices have continued to recover since falling from their April 2018 high and are now again at all-time highs.  January marked the ninth straight month of small, positive increases in mineral rights prices in West Texas and New Mexico.

Price Stability Becoming the Norm. The sharp, upward price increases that we all got used to from 2015-2017 appear to have moderated. For the ninth straight month, we have seen largely flat, but slightly positive, price increases.  We continue to believe that mineral prices will continue to stabilize around current levels for at least the next few months, though increases or decreases in oil prices could cause prices to become more volatile.  However, the substantial decline in oil prices that we’ve seen since October 2018 leads us to believe that prices may experience small near-term dips.  This has certainly held true in other parts of the country, but the Permian has not yet seen similar declines.  We believe those may be coming soon.

Another trend that we’ve noticed is that the rate at which prices are increasing is leveling off.  While prices may continue to rise further still, it seems as if most, if not almost all, of the “upside” from better wells or new formations has been priced into the current very high price levels.  

Buyers Now Pickier about Location than Ever Before

As time has gone on and operators have drilled numerous wells all across West Texas, buyers are quickly becoming savvy about which areas are of the highest quality and which parts are of lesser quality.  For those areas where well results have been poorer (relative to the best areas), we are seeing diminished buyer interest.  Fewer buyers translates into weaker prices in those areas.  But the converse is also true – for those areas deemed to be the best of all, both buyer demand and prices have continued to rise.

Market Intel – What We’re Hearing

Intel from Mineral Rights Buyers. Here is a sampling of the feedback we’re getting from buyers active in the market. Most buyers remain positive on West Texas.

“With oil prices now around $50, we are also starting to pull back on the prices we are willing to offer.  If prices stay around these levels, we think most buyers will do the same and prices will fall.”

“We view mineral rights in the Delaware Basin as being richly valued, but these prices can probably be justified in many cases. At current levels, we are becoming more selective about location of the acreage and identity of the operator.”

“We continue to be active buyers in the West Texas, because it has the best rock in the country…”

A minority of buyers are shifting to other parts of the country where mineral prices are not so high.

“We are able to justify nosebleed prices in limited areas where there is very high drilling activity, but unless we have line-of-sight to near-term drilling we think this basin is just too highly priced.”

“We are moving toward investments in other parts of the country, as we believe these represent a better value than the high prices in West Texas.”

How Is the Mineral Rights Price Index-West Texas Calculated?

Updated monthly, the Shale Marketplace Mineral Rights Price Index (the “SM MRPI”) is the only index tracking the value of mineral rights in the United States. The SM MRPI-West Texas is based on transaction data from hundreds of sales of mineral rights in West Texas since January 2016. This information is standardized to account for differences in royalty rates, locations, and current production. Each month, a new index value is calculated and then published by Shale Marketplace.

What Does the SM MRPI-West Texas Mean?

The SM MRPI-West Texas is a measure of price appreciation in the value of mineral rights. The SM MRPI-West Texas began at an index value of 100 on January 1, 2016 and stands today at 286.7. This means that, on average, for every $100 of minerals that you owned in January 2016, those same minerals are now worth approximately $286.70.

Would You Like Monthly Price Updates?

The SM Mineral Rights Price Index-West Texas is published monthly by Shale Marketplace based on the latest mineral rights transactions in West Texas. If you would like to receive free monthly updates showing price changes for West Texas mineral rights, please contact us and we’ll be glad to send you monthly updates.  

Shale Marketplace Mineral Rights Price Index – North Dakota, Wyoming, and Colorado

Prices Continue to Decline from Early 2018 Peak

Now is a good time to be a mineral rights owner in North Dakota, Wyoming, and Colorado.  This is particularly true if your mineral rights are located in one or more of the following counties, where Shale Marketplace has seen some of the highest prices:

  • ND: McKenzie, Dunn, Mountrail, or Williams County
  • CO: Weld County
  • WY: Converse and Campbell County

While prices for mineral rights in North Dakota, Wyoming, and Colorado increased in December 2018, we saw a slight decline in January 2019.

Prices Down 5.3% in January 2019 Compared to Last Month

The chart below shows trends in mineral rights prices in North Dakota, Wyoming, and Colorado since the index began in September 2014.

The chart below is a subset of the chart above, showing only mineral rights price trends in North Dakota, Wyoming, and Colorado during the past twelve months.  

Prices of mineral rights in the best parts of North Dakota, Wyoming, and Colorado have experienced month-to-month volatility.  While some months were up and others were down, prices were flat – neither increasing nor decreasing – over the last twelve months.  However, there has been a clear trend downward in prices over the past nine months.  We attribute this to three primary factors.

  • West Texas / Permian Basin superior economics.  The US has seen a surge of oil production from shale oil wells over the past few years.  This has led to a “supply glut” where more oil is being produced than can be used by the market, which in turn causes prices to decline.  Some US oil producers have begun shifting more of their drilling activity to West Texas and New Mexico’s Permian Basin and away from less economic basins like the Bakken in North Dakota, the Powder River Basin in Wyoming, and the DJ Basin in Colorado.  Each of these basins is good, but there is significantly more drilling activity in West Texas than there is in North Dakota, Wyoming, and Colorado combined, which has caused mineral rights prices in West Texas to hold firm and those in North Dakota, Wyoming, and Colorado to decline slightly.  Over the next few years, we expect these drilling trends to continue, with West Texas far outpacing the rest of the country.  It remains to be seen whether this will cause mineral rights prices in the northern US to continue to slide or to stabilize around current levels.
  • Colorado continues to weigh down pricing.  In November, Colorado voters rejected Proposition 112, which would have greatly restricted operators’ ability to drill a substantial portion of their acreage in Colorado’s DJ Basin.  Some have estimated that up to 70% of the minerals in the core and 40% of the minerals in the entire basin would be rendered “undrillable” under the proposed law, if it had passed.  While mineral rights owners breathed a sigh of relief when the ballot measure failed, many are still nervous and now view substantial restrictions on fracking as “when not if.”  With buyers nervous that fracking and drilling restrictions could come in the next election cycle, buyers seem to be unwilling to pay high prices for minerals in Colorado.
  • Oil prices fall.  We’ve seen oil prices fall from $73.25 per barrel to $50 in a matter of a few months.  Lower prices obviously make it less profitable for an operator to drill a well, which results in fewer overall wells drilled.  We have yet to see a major pullback in rig activity, but if realized prices at the wellhead (and on royalty check stubs) continue to hold at less than $50 per barrel a drilling slowdown grows more likely.  This obviously hurts mineral rights pricing. 

The Shale Marketplace Mineral Rights Price Index-ND/WY/CO now stands at 72.9.  This is almost identical to the level it was at one year ago (in January 2018).

Highlights from this month:

  • Prices Flat Since January 2018
  • Prices Have Seen A Strong Recovery Since Bottoming in Early 2016 (when oil broke below $30 per barrel)
  • Weakness in Prices Caused by (1) Colorado’s Proposition 112, which would reduce drilling and (2) Lower Oil Prices
Concerns About Oil Prices in North Dakota and Wyoming

Mineral Rights Prices Continue to Follow Oil Prices.  When oil prices fell during 2014-2016, so, too, did the value of mineral rights in ND, WY, and CO.  Both oil and mineral rights prices have steadily climbed from their lows.  However, just as we have seen oil prices decrease, we have also seen mineral rights prices decrease in North Dakota, Wyoming, and Colorado.  It has been our experience that mineral rights in North Dakota, Wyoming, and Colorado are more sensitive to changes in oil prices than are other regions of the country, such as the Permian in West Texas and the Eagle Ford in Southeast Texas.

Further Price Declines May Continue in Short-Term.  We believe that downside risk still exists if prices don’t increase into the high $50’s or low $60’s.  To ensure that drilling will continue at its current pace in these areas, we believe that oil prices in North Dakota and Wyoming need to rise to $50 per barrel or greater.  Otherwise, there is a significant chance that we see declines in drilling activity – and mineral prices – in 2019.

Market Intel – What We’re Hearing

Intel from Mineral Rights Buyers.  Here is a sampling of the feedback we’re getting from buyers active in the market.  Most buyers remain positive on ND/WY/CO.

“We are very concerned with near-term oil prices.  The ‘double whammy’ of declines in WTI from $70 to $50 and declines in oil prices in North Dakota from $66 to $30 make us cautious.  We believe our buying activity and offer amounts are likely to trend lower until drilling again becomes economic for producers.”

“We have seen activity pick up in Wyoming and believe that new wells will be profitable so long as oil remains above $50 per barrel.  We like the area.”

“Having been burned pretty badly in 2014, we are watching oil prices very closely.  History shows us that the Bakken and Powder River Basin are among the first to slow down after oil price declines.  We remain hopeful but very cautious.”

“We continue to be active buyers in North Dakota.  It is good to see rigs returning to the area.”

“Recent well results in Wyoming are showing us that the basin is less uniform than we previously believed.  We feel location is particularly important here, because in some cases even only a couple of miles can make a huge difference in value.”

How Is the Mineral Rights Price Index Calculated?

Updated monthly, the Shale Marketplace Mineral Rights Price Index (the “SM MRPI”) is the only index tracking the value of mineral rights in the United States.  The SM MRPI-ND/WY/CO is based on transaction data from hundreds of sales of mineral rights in North Dakota, Wyoming, and Colorado since September 2014.  This information is standardized to account for differences in royalty rates, locations, and current production.  Each month, a new index value is calculated and then published by Shale Marketplace.

What Does the SM MRPI-ND/WY/CO Mean?

The SM MRPI-ND/WY/CO began at an index value of 100 on September 1, 2014 and stands today at 72.9.  This means that, on average, for every $100 of minerals that you owned in September 2014, those same minerals are now worth approximately $72.90.

Would You Like Monthly Price Updates?

The SM Mineral Rights Price Index-ND/WY/CO is published monthly by Shale Marketplace based on the latest mineral rights transactions.  If you would like to receive free monthly updates showing price changes for ND/WY/CO mineral rights, please visit www.ShaleMarketplace.com/mineral-rights-index.

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