Appraisal of Oil and Gas Royalties

The State Tax Division is experiencing a high volume of calls on the oil and gas appraisals. Please bear with us as we work to manage all incoming calls.

Oil and Gas Clerical Error Notice: 2023

The State Tax Division calculates the value of oil and gas royalty interests using an income approach to value. This serves as a calculation to determine the value the interest would receive if sold at market value, not the actual income received.

This calculation is performed using a number of factors, including:

  • Whether the producing well is horizontal or vertical;
  • The geographic location of the well;
  • The formation that the well is producing from (Marcellus, Utica, Onondaga, etc.)
  • The age of the well.

These factors are supplied by the producer along with the actual royalty paid in 2022 to a royalty owner. Some royalty interests are expected to produce more income over the life of the well than others, and these factors help determine what that income is expected to be (based upon current price of gas).

For a typical royalty interest, the income approach will produce a value of the interest that is anywhere between 1.5 and 7 times the actual income received by a royalty owner as reported by the producer.

Example: A royalty owner receives royalty payments in 2022 for their interest totaling $1,000. Depending on the factors above, the value of that interest will be anywhere between $1,500 and $7,000. This is based on all projected future income of the well (and the royalty on the well).

The State Tax Division appraises more than 1.3 million oil and gas property tax interests. We may not be able to answer any question about any particular interest in a timely manner due to the overwhelming number of requests we receive for an explanation.


Frequently Asked Questions

Is this what you think I’m getting in 2024?

No, this is an appraised value of what your minerals are worth for Tax Year 2024. It is based upon information provided to us by the producing company for Calendar Year 2022.

Why did my value increase so much?

2021 was not a good year for oil and gas. Production as well as the value of Oil and Gas were both down. 2022 saw a rebound in both production as well as record prices of Oil and Gas.

Is this income tax?

No, it is not income tax. We do not tax the income for Property Tax purposes. In the State of WV, minerals are considered property and therefore fall under the Ad Valorem Property Tax. All real and tangible personal property, with limited exceptions, is subject to property tax.

I need an address change, name change, or complaints that the legal description is incorrect.

Please contact your appropriate County Assessor's office.

Where can I appeal?

You may appeal at your County Assessor’s office in writing no later than February 22, 2024. You may also appeal to the West Virginia Office of Tax Appeals. For more information on the Office of Tax Appeals, click here.