Limit
It is not a single number
A single number is almost always a teaser. The output of the review is a range with the assumptions stated, so you can see how the answer moves when the inputs change.
Published methodology · explicit assumptions
Published DCF methodology: how we review Texas mineral rights
We publish this so you can see our work. The methodology applies a discounted-cash-flow approach to expected royalty income, with explicit assumptions, decline-curve context, and offer-terms review where an offer exists. The output is a directional range with the assumptions stated, not a teaser number, and not a certified valuation.
The approach, in plain English
A discounted-cash-flow review models expected future royalty income from the section, applies a discount rate that reflects the risk of the cash flows, and arrives at a present-value range. The range is the directional assessment; the assumptions and the inputs are what make it useful.
- Pull productionRecent and historical royalty income anchors the review when records are available.
- Model declineDecline-curve context helps frame expected future cash flow.
- Apply discount rateOperator, basin, title, and data confidence shape the risk-adjusted rate.
- Layer offer termsIf you have an offer, clauses and conveyed rights are reviewed separately.
- State the rangeThe written review states the range and the assumptions behind it.
What we look at
The factors below are the primary inputs to the DCF. Each carries a different weight in the final range; we state the influence and the source so you can interrogate the result.
| Factor | What we look at | Influence | Source / reference | Why it moves the range |
|---|---|---|---|---|
| Production history | 12-24 months of historical production for the section, when available; older production data may be used when newer data is unavailable. | high | Public Texas RRC data, operator disclosures, owner-supplied check stubs | Recent production narrows the range and helps distinguish current cash flow from older well behavior. |
| Decline-curve context | Type of decline (exponential or hyperbolic), expected terminal rate, and basin context. | high | Operator decline-curve disclosures, MRX internal rate database | The decline shape changes how quickly expected royalty income falls over time. |
| Operator quality | Operator track record in the basin: drilling cadence, completion efficiency, history of plugging and abandonment. | medium | Public operator filings, RRC enforcement actions | Operator behavior affects development timing, operating confidence, and risk around future wells. |
| Royalty terms and depth | Royalty fraction, depth-of-rights (e.g., "Below the Barnett"), and any post-production deductions. | high | Owner-supplied lease and division order | The rights actually conveyed determine which cash flows belong in the review. |
| Commodity price assumptions | A flat-line or conservative strip based on a publicly visible benchmark. We do not use undisclosed price decks. | medium | NYMEX strip or equivalent at the time of review | Commodity assumptions can widen or tighten the range, so the benchmark has to be visible. |
| Discount rate | A risk-adjusted rate reflecting operator, basin, and title confidence. Stated in the written review. | high | MRX internal rate card; reviewed periodically | Higher uncertainty requires a higher discount rate, which lowers present value. |
| Title and acreage | Mineral-acreage confirmation, partial-interest flag, multi-heir splits, and any encumbrances. | high | Owner-supplied title documents, county records | Clearer acreage and ownership assumptions improve confidence in the reviewed interest. |
| Offer terms (if any) | Clawback provisions, effective date, post-close obligations, depth of rights conveyed. | high | Owner-supplied offer letter or LOI | Offer clauses can change the practical value of a proposed transaction even when the headline price looks clear. |
| Tax and estate posture | Whether the interest is held individually, jointly, in trust, or through an estate. Affects transaction structure, not the DCF range. | low | Owner confirmation; MRX does not give tax advice | Structure affects the questions to verify with professionals, not the mineral cash-flow model itself. |
What this methodology is not
A published methodology is not the same as a regulated certification. We state the limits explicitly so the output is not over-read.
Limit
It is not a certified valuation
“Appraisal” is a regulated activity in Texas. Our review is a directional underwriter assessment. When a certified valuation is required, owners often consider engaging a Texas-licensed appraiser; we can help you think through when that makes sense.
Limit
It is not legal or tax advice
Our team does not provide legal or tax advice. We help you think through the questions worth asking a Texas-licensed attorney and CPA, and we recommend verifying ownership, royalty, tax, and production assumptions with qualified professionals before any transaction.
Limit
It is not a guarantee of value or sale price
Markets move, operators change, and title surprises happen. A directional range is a present-value view of expected cash flows under stated assumptions. It is not a guarantee.
How the output is delivered
The review should make the assumptions easier to inspect, not harder. The output stays focused on the range, the inputs, and the questions an owner may want to verify.
A directional range
Each review produces a low-to-high range with a central case, scaled to the interest you hold. Not a single number, not a teaser.
Stated assumptions
Inputs are written down: production, decline, royalty terms, discount rate, and, when applicable, the offer clauses you can interrogate.
A written follow-up
The deliverable is a written assessment followed by a plain-language call. Timing depends on document completeness and operator data availability.
Frequently asked questions
Does this methodology produce a regulated or certified valuation?
No. The methodology is published to show our work, not to claim a regulated or certified valuation. Our review is a directional underwriter assessment. For certified work, owners often consider engaging a Texas-licensed appraiser; we can help you think through when that makes sense.
Do you use one number, or a range?
A range, with the assumptions stated. A single number is almost always a teaser.
What is the most important factor in the range?
Production history. Recent and historical production data, decline-curve context, and operator activity are typically the most informative inputs. The other factors in the table are layered on top of those.
Will you tell me whether to sell?
No. MRX provides educational information and a directional underwriter assessment so you can see the assumptions behind a range. Whether to sell, hold, gift, or transfer should be reviewed with the qualified professionals who know your legal, tax, title, and family context.
How is this different from a buyer's offer letter?
A buyer offer usually gives you proposed terms. The MRX methodology shows the inputs, assumptions, and risks behind a directional range, then separates the review from any decision you make about selling. If MRX may be a buyer, that relationship is disclosed in writing before any agreement is signed.
What stays visible in the review
Range, not a number
Every review produces a directional range with the assumptions stated.
No appraisal, no legal opinion
We surface what qualified professionals can verify when their work is needed.
NYMEX strip, not a hidden deck
Commodity price assumptions are tied to a publicly visible benchmark.
Texas-focused, explicit assumptions
Risk-adjusted rates reflect operator, basin, and title confidence.
Apply the published methodology
See the assumptions behind your mineral-rights range
Share your royalty records, ownership documents, or an offer letter. MRX will prepare a free, confidential underwriter review and return a directional range with the inputs and assumptions stated, explicitly not a certified appraisal, legal opinion, or tax opinion.
No card required. No obligation. Confidential review.
Methodology reading list
Read the live articles behind the review inputs
These published MRX articles explain the practical inputs behind valuation, offer comparison, documentation, and agreement terms. Draft or held content is intentionally excluded.
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Valuation inputs
How Are Mineral Rights Valued?
A plain-language walk-through of the DCF inputs behind a directional range: production history, decline-curve context, royalty terms, and the discount rate we apply to expected royalty income.
Read the article → -
Comparing offers
How to Compare Mineral Rights Buyers in Texas
What to look at beyond the headline price: buyer process, funding certainty, clawbacks, post-close obligations, and why agreement terms change what an offer actually means.
Read the article → -
Preparing for review
Documents Needed to Sell Texas Mineral Rights
A short checklist of the royalty statements, leases, division orders, deeds, and title records that let an underwriter state every assumption in the written review.
Read the article → -
Reading offer terms
What Is a Clawback Clause in a Mineral Rights Sale
Plain-language explanation of survival periods, carve-outs, notice-and-cure rights, and the conditions under which a buyer can re-open a deal after closing.
Read the article →