North Dakota-owned oil, gas mineral rights valued at $2.8B

Nov 16, 2022, 9:03 PM | Updated: Nov 17, 2022, 12:07 pm

BISMARCK, N.D. (AP) — An estimate of oil and gas mineral rights owned by North Dakota pegs their value at $2.8 billion, an 18% increase from last year, according to an appraisal released Thursday to the state Land Board.

The increase comes largely from strong oil and natural gas prices and sustained production over the past year, according to Watford City-based MineralTracker, part of First International Bank & Trust. Joel Brown, the company’s mineral service manager, said about 9,000 wells in which the state holds an interest were examined — or about half of those operating in the state.

In the fiscal year that ended in June, North Dakota received a record $464 million in royalties from state-owned minerals, including a high of $55 million in July, the report said.

Brown said the state’s mineral rights asset is estimated to bring in more than $10 billion in royalties over the next several decades.

The new valuation considers a variety of components, including oil and gas prices and the decline expected in a well’s production over the next several decades.

MineralTracker, which does the assessment under contract with the state, produced a 35,000-page report this year, which was summarized in a 40-page document presented to the Land Board. The analysis Thursday was the third produced by the company.

The Land Board, led by Gov. Doug Burgum, oversees the state Land Department, an agency that leases rights to state-owned land and it manages a number of state funds.

Burgum said in an interview that the appraisal is valuable “for future planning and it helps for making financial decisions about the best way to manage all these all the assets that we have.”

The company’s appraisal last year came in about $1 billion more than a similar estimate in 2020 when the coronavirus created uncertainty and low prices, and demand for oil declined.

Oil prices have rebounded since the 2020 downturn and natural gas production is growing at a faster rate than oil production, though oil still accounts for about 90% of the royalty revenue from leases on 2.6 million acres of state-owned land.

The state’s four biggest oil-producing counties — Mountrail, Williams, Dunn and McKenzie — account for the highest portion of the valuation.

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North Dakota-owned oil, gas mineral rights valued at $2.8B