Appraisers' Free Forum

Got a request to do a mineral appraisal...but

A regional airport is taking property, including 2 properties which are leased severed mineral rights, 40 and 200 acre tracts. The FAA requires a fee simple appraisal. In order to complete the transaction, they have to take the egress /ingress rights under the two parcels. i.e.- they can keep the mineral right without the right to enter or egress the mineral.

Issues.
1. The mineral rights are a severed estate.

2. The leases were taken for $350 and $300 each. So there is a leased fee estate and a leasehold estate in the subsurface.

3. You are only going to value the egress and ingress rights from the bundle of rights in the rights you own... (remember the bundle of rights acronym SLUGER - You can Sell, Lease, Use, Give away, Enter (egress/ingress), or Refuse to do anything.)

Keep in mind that you could still drill under the tract using horizontal drilling techniques which can "do" laterals of a mile or more anyway...

And keep in mind that the location is in an area where current drilling has been utterly a failure and leases are probably now worthless to begin with. There is no production within 60 miles.

I know when to fold. That is way more than I want to do and I don't have enough imagination to charge the kind of fee that eventually will be charged (I bet this costs over $30,000 to appraise 240 acres.)

So hire the guy who wants it, and bill $45,000 for knowing his phone number.

Jim Plante wrote:So hire the guy who wants it, and bill $45,000 for knowing his phone number.

Shields AMC. I like the sounds of it. Do it Terrell.

that makes my head hurt