Decision tool
Mineral rights sale calculator: is the offer fair?
A sale offer is a trade. You give up future royalty checks in exchange for a known lump sum today. This calculator helps you see what your future royalties are worth in today's dollars — and what sale proceeds could generate as invested capital — so you can compare both sides with real numbers.
Your numbers
Year-by-year royalty projection
| Year | Royalty income | Cumulative royalties | Present value (yr) |
|---|
Get a second opinion before deciding
A mineral rights sale is usually permanent and irreversible. We match royalty families with fee-only financial advisors who can model the full picture: after-tax proceeds, family distributions, investment alternatives, and estate implications.
Understanding the inputs
Production decline rate
Oil and gas production typically declines as a well matures. Decline rates vary significantly by well type, formation, and operator. The best way to estimate your rate is to look at your royalty check history over the past 2–4 years and calculate the average annual percentage change. If checks have been roughly flat, use a low decline rate; if checks have been dropping year over year, the decline rate may be higher. A conservative plan assumes the historical decline continues.
NPV discount rate
The discount rate reflects the risk and time preference you apply to future royalty checks. Higher rates (10–15%) are commonly used by buyers who must account for commodity price risk, production shortfall, title issues, and profit margin. As the current owner, you might use a lower rate (6–8%) if you believe the royalty stream is relatively durable. Changing the discount rate has a large effect on NPV — the same royalty stream can look very different at 6% versus 12%. Try both to see the range.
What buyers typically pay
Mineral rights buyers acquire the same risks you currently hold — production decline, commodity prices, operator changes, and lease complications. They price offers to generate an acceptable return under conservative assumptions. An offer may be below your owner-perspective NPV and still represent a fair transaction — the buyer is absorbing risks you no longer want to carry. The key question is whether the certainty, liquidity, and simplification are worth the difference to your family.
After-tax considerations
This calculator shows pre-tax financial math only. In practice, a mineral rights sale has tax consequences: your capital gain depends on adjusted basis (original cost reduced by depletion deductions taken over the years), your holding period, and potentially ordinary income recapture on certain elements. Ongoing royalty income is ordinary income but qualifies for a depletion deduction. A CPA familiar with oil and gas taxation should review your situation before you sign a sale agreement — the after-tax comparison can differ substantially from the pre-tax version.
Read the full mineral rights sale vs keep decision guide and how to invest royalty sale proceeds if you do sell. The oil royalty wealth guide covers the broader planning picture.
- IRS: Oil, Gas, Mining — depletion, basis, and royalty income rules
- EIA: Drilling Productivity Report — production and decline data by formation
- Society of Petroleum Engineers: Petroleum Reserves Definitions
- MineralWise: Mineral Rights Valuation and Market Resources
Calculator uses standard NPV math and geometric production decline. No tax bracket values are embedded — this is a pre-tax planning tool only. Consult a CPA for after-tax analysis. Values verified as of June 2026.