Hi - How would someone go about getting an accurate assessment of the value or land and mineral rights in PA for estate planning purposes? We are looking for current and future potential values. We are currently unleased but think there is undeveloped shale. Recommendations for assessors are welcome.
Thanks, Lee Ann
Unless wells are placed on a choke limiting produced volume the wells decline very quickly as free gas is depleted and as time goes on desorption becomes increasingly important, but production does continue to decline. There are a variety of decline curves or type curves, but they exhibit exponential declines then level off as time goes on.
The notion of Fair Market Value is predicated upon the concepts of substitution and anticipation. The methods of valuing mineral rights are the Sales Comparison Approach, illustrating substitution, and the Income Approach, illustrating anticipation. Increasing value of land, as observed in the Sales Comparison, is predicated upon knowledgeable market participants' anticipation of future income stream. The anticipated income streams are discounted based upon the market-perceived risk.