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Mineral Valuation

So you inherited a mineral estate…Now what? 

Posted May 12, 2016

If you inherited an undivided interest of 500 acres of land with an associated title to known coal deposits and or suspected oil and gas deposits, how would you determine the value of the land? This is an all too common question for those who inherit land with a title to known or suspected mineral deposits. The problem is further complicated by other factors: the intentions of the other heirs, the estate valuations, the required listing of value for the timely tax return filings. Where do you begin?

Most real estate agents will quickly and rightfully point out that they have no experience and are not qualified to estimate the value of the coal, oil, or gas that may or may not be present beneath the surface. They may also point out that the mineral value is separate and very different from the surface value and the value of any dwellings or structures. They may point you to a state-operated geological survey or an engineering firm to solve your problem.  Who do you call?

A geological survey, at little or no cost, can guide you to some maps and maybe some technical reports that detail the extent, thickness, and depth of mineral resources in your county, township, or “quadrangle” area. However, neither the maps nor publications list any estimate of the value of the mineral deposits. Many engineering firms staffed by civil and even mining engineers lack the experience and qualifications to perform a mineral valuation or appraisal. If they did have the experience and qualifications, they may shy away from devoting staff, budgets, and time to worry about your 500 acres. What do you do?

You will likely need to consult a professional geologist or a small firm that has specific experience in coal resource estimation and coal appraisal. Coal appraisers are generally listed in an online directory of the Board of Registration for Professional Geologists or the Board of Professional Engineers in the state of your mineral interest holdings. The professional will know how to quickly access relevant coal resource data and information, market pricing, and determine a mineral value, typically without having to visit the property or make a lengthy inquest.