What is Mineral Status?

An important factor to be familiar with when considering mineral rights investments is mineral status. When we refer to mineral status, we are essentially talking about the life cycle stage of the wells located on the mineral acres we are interested in. Different values are applied to minerals with different statuses because status is tied to risk level. In terms of minerals, the risk is that no well will be drilled on an open mineral acre, thus resulting in zero returns. There are five main mineral status types, listed below:

Mineral Status Types

  • Open: At this stage, the minerals have no drilling activity or regulatory filings. The operator has simply decided that they like the area and has leased the land. Think about it in terms of real estate. Minerals that are in open status are like raw land that hasn’t been zoned or defined yet.
  • Regulatory: At this stage, an exploration and production company has requested to drill a well by filing deeds at the state and county level.
  • Drilling/Drilled: At this stage, a well is being drilled or has completed the drilling process but no resources have been extracted yet. From the time when the operator initiates the spudding of a well to the actual drilling and casing of a well, the minerals are in this stage.
  • Drilled Uncompleted (DUC): At this stage, the well has been drilled but is awaiting completion. For instance, in many cases the well is awaiting fracing at this stage.
  • Producing: This stage occurs once the well has been turned ‘online,’ initiating the process of oil and gas extraction. The oil and gas produced is then gathered in storage tanks or put into pipelines so that it can be transported and sold.

Mineral Value Assumptions

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