An evaluation is a more general report which may or may not address value and is specific to the question of the client.
A valuation is the result of an evaluations that addressed value (how much something is worth), but may not meet the criteria of an appraisal. If the value of an asset is needed but there is intentionally/unavoidably bias in the valuation, it shouldn’t be called an appraisal. It’s just a generic valuation.
An appraisal is a type of unbiased valuation which results in the Fair Market Value (how much it should sell for if properly marketed) and should follow guidelines set forth by USPAP.
- Trust and estate planning
- In support of acquisition and divestiture
- Gifting
- Tax and litigation support
- Financing
- State and federal land appraisals
- Just compensation in eminent domain
There’s a certain auction website (who would benefit from you NOT getting an independent appraisal…) claiming mineral appraisers would be out there making loads of money if they knew how much these minerals were actually worth.
Well, news flash: that’s exactly what happens.
Most appraisers work for the industry (as in Chevron, Shell, Exxon, large mineral buyers, etc) and, yes, are making those companies loads of money. Petroleum Engineers and Petroleum Geologists have some of the highest salaries in the technical world for a reason. They aren’t called “mineral appraisers” in the industry, but these professionals know more than anyone how much oil and gas is underground, the risks involved in bringing it to the surface, the current value of future production, and how much total value to assign a chunk of land.
Unfortunately, these petroleum professionals mostly (but not all!) work for companies with more investment resources than the typical mineral owner (because the salaries are much higher when large investors are involved), yet the mineral owner is still held responsible for their own evaluation of an offer or inheritance. Pecan Tree Oil & Gas bridges that gap with a different business model that can and right-fit the evaluations with low overhead costs, rather than reducing the quality or availability.
- SCOPE: The first step is to determine your specific needs and questions regarding the property (e-mail or phone call). Examples questions to explore:
- Do you want guidance on how much it should sell for? Probability ranges? Sensitivities?
- Are you planning financially and want to focus on future royalty cash flow and risk?
- Do you have any other non-producing interests you’d like to include?
- Are there any questions on title/ownership?
- Do you have questions on the royalty payments you’ve received?
- Have you received any operator/landman/buyer correspondence you would like me to review?
- How detailed do you want/need the report? Ball-park estimate, or appraised value with small range?
- If you plan to sell, do you need to establish retrospective value at the date of inheritance for capital gains planning?
- ESTIMATE: I’ll generate a formal project estimate with deliverables, timeline, and estimated cost for you to approve via DocuSign.
- 10% PAYMENT: The first 10% is due at kickoff (for projects greater than $500 estimated) and will be invoiced through QuickBooks. Payment can be made by check, online with a credit card, or PayPal.
- RESEARCH: Once the project kicks off, I will send a list of documents that would be helpful, in order of priority (leases, deeds, pay statements, etc.)
- DELIVERY & REMAINING PAYMENT: When the appraisal is completed, I will e-mail you the PDF report (plus any additional supporting documents) and will send an invoice for the remaining quoted amount.
- PRESENTATION: If you would like, we can arrange a phone call or Zoom meeting to present the report, just the highlights, or just Q&A. Whatever appetite you have for it (some owners want to know everything and some just want the final answer!). This meeting is included in my appraisal price and is to make sure you have your questions answered. Family is welcome to attend.
Appraisals and “Quick Looks” are typically billed as project pricing. If there are unknowns with the scope to-be-determined, sometimes hourly with an agreed-upon cap makes more sense for all involved. Some projects have a mix of the two, where a certain scope is flat pricing and outside that scope is hourly with a cap. However you feel most comfortable is the #1 determiner of how work is billed.
On rare occasions, commission-based billing makes the most sense and can be discussed (mineral management, acquisitions, divestitures, etc.). Appraisals are never billed with a percent commission to avoid bias.
Additional pay structures can be discussed as needed, such as timing of payment, creative forms of payment (mineral interest, etc), and other forms of assistance (see Roots of Love mission.)
I would love to help you determine how much in royalties are due to you. For assistance with fund recovery, I HIGHLY recommend Amy Kyrish with Warm Hearts Land, LLC. Her business specializes in getting royalty owners their rightful payments, and is who I go to for all my royalty payment questions. The Mineral Rights Forum is also a good resource for understanding the process!
In rough order of priority:
- Revenue Statements, preferably last 12 months of csv/excel format (but scanned PDF is fine).
- Mineral Deed(s)
- Oil & Gas Lease(s), and any amendments/ratifications/extensions
- Division Order(s), for any new wells in last 5 years
- Any operator correspondence in the last 2 years (specifically if there were any interruptions of production due to the pandemic or Texas freeze)
- Title opinion(s) (not typically available, but very useful if so)
- Any solicited/unsolicited offer(s) in the last 3 years
- If working interest is involved, any well reports available (production reports, AFEs, invoices, elections, etc.)
There are several options for learning more!
- The “Learn” section of this website has several resources to increase your knowledge, including our article archive and industry links.
- The MineralRightsForum is a free community for discussing minerals and see what’s happening in the mineral space
- Pecan Tree’s brand new www.PecanEstimate.com platform can give you an on-demand $50 estimate of your property’s value, plus any wells, activity, and recommendations we have for your area!
No, we don’t purchase minerals, royalty, or anything similar. We’re not affiliated with nor backed by any companies who do either (Pecan Tree is 100% privately owned by Tracy Lenz).
Why? Imagine if a realtor said your house was worth $200,000 then offered to buy it for that price before he put it on the market. THAT is why we don’t buy minerals. There’s no real way to value somethings in an unbiased way if you’re planning on buying it yourself.
I take all my signed appraisal and evaluations seriously! Not only have I spent the last 16 years studying petroleum engineering (with multiple petroleum engineering degrees from top engineering schools) and I’m also professionally licensed as an engineer. My job the last 12 years has been to figure out the value of reservoirs for operators and financial institutions looking to invest millions of dollars, and I bring the same dedication to each and every client now. My appraisals follow USPAP guidelines and I use every resource available to reconcile the value to real world numbers. My estimates are fully supported with research, references, reconciliation, and documentation.
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Testimonials
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My wife needed an appraisal of some inherited mineral rights. It isn’t easy to find someone to do this, especially at a reasonable cost. Tracy did an outstanding and thorough job. When the appraisal was finished she spent an hour with us going over the details and methodology and was very patient and clear in her explanations. We now have a much better understanding of our holdings. We were very satisfied and would highly recommend Tracy.
Jim Wogulis
Client -
I recently had call to hire Tracy of Pecan Tree for a valuation of mineral rights I intend to sell. The only trouble I had working with Tracy is she made the competition look like either ignorant clowns, self-important posers, or outright crooks.
Tracy explained in simple terms some of the complexities of oil and gas valuation, processes, terminology, and methodologies. She told me more in five minutes than an exhausting half hour conversation with a representative of another organization. She is not only easy to communicate with, but gracefully transitions to nuanced arguments when needed.
Her final report was thorough, well documented, easily understood, and I expect will pay for itself when these interests hit the market. Certainly, it gave me confidence and peace of mind knowing where I stand and what I can expect financially.
It’s not just me. When I asked another professional, I was told I could hardly do better than working with Pecan Tree. I would recommend Tracy and Pecan Tree without reservation.
Mike Hess
Mineral Owner -
“I inherited a piece of property in West Texas that I had never seen before and knew very little about. Tracy’s Quick Look evaluation provide the pertinent data and information that I’ve found quite helpful in the further knowledge of my land. I definitely would recommend her services for anyone in a similar situation such as mine.”
Peter P.
Client -
“Wow! My family and I went from zero knowledge to renegotiating our oil lease with 100% success after Tracy completed and debriefed us on the Quick Look report she did for us. We were on a short timeline to get the lease signed and Tracy was able to complete the report in 24 hours. The Quick Look was professionally written, thorough and comprehensive. For the first time we gained an understanding of the geography, drilling trends in area, and strategies for protecting our rights. We implemented all of her recommendations on the lease renewal negotiations resulting in additional bonus revenue and better post production cost terms. The conference call to review the report was invaluable to our learning process. I highly recommend her services.”
Wynn
Client -
“Tracy & her staff have been awesome at what they do. Tracy was recommended to me by a friend and I have absolutely no regrets on having her help me with what I needed. If you have royalties? I HIGHLY recommend her company!!! She responds to every single email and is a very courteous and sweet person!! I just can’t say enough about them.”
Brandy
Client -
“What a great and needed service to protect the ‘little guy’. Tracy has the professional expertise and the personal touch to help owners understand the value of what they own and assess opportunities for the future.”
Eric Niccum
Permian Regional VP for Marathon Oil -
“I’ve always been impressed with Tracy’s wholistic understanding of the oil & gas business, and her ability to turn data into insight. She sees the big picture when the rest of us get caught in the weeds, and asks the right questions when the people around her are getting tunnel vision. Pecan Tree Oil & Gas would be my first call for an honest, accurate evaluation of my property’s value.”
Peter Yee
Founding Principal of Impact I/O -
“I recently needed some inherited mineral property appraised for capital gains purposes and to also help me evaluate various purchase offers. Pecan Tree Oil & Gas gave me a comprehensive and objective report based on scientific analysis and extensive industry knowledge. I would highly recommend their services!”
Carlos R.
Client
Contact Info
- Tracy Lenz, PE, CMA
- Pecan Tree Oil & Gas, LLC
- 1801 Red Bud Ln Ste B PMB 226
- (512) 578-9160
- tracy@pecantreeog.com