Whether to sell or keep mineral royalties is a question about the future: a cash offer is certain, and the checks it replaces usually shrink. Across the Lower 48, oil from wells that were already producing at the end of 2023 fell from 11.0 to 6.7 million barrels a day within a year (EIA, Nov 2025). Prices move as well: the annual average WTI price ran from $39.16 a barrel in 2020 to $94.90 in 2022 (EIA, Oct 2026).
This page gives a worksheet that compares a written cash offer with keeping the royalties under assumptions you choose, then the published data that should inform those assumptions: how fast production from new wells declines, how far oil and gas prices have moved, and what a discount rate stands for. Every figure links to the agency or association that published it.
Key Takeaways
- Oil output from Lower 48 wells online by end 2023 fell 39% in 2024 (EIA, Nov 2025).
- Gas from the same wells fell from 115.4 to 88.4 billion cubic feet a day (EIA, Nov 2025).
- Horizontal wells produced 94% of Lower 48 oil in December 2024 (EIA, Nov 2025).
- Eagle Ford wells lost 60% to 70% of their output in the first year (EIA, Sep 2014).
- Wells drilled since 2014 supplied 48% of Lower 48 oil in 2015 (EIA, Mar 2016).
- WTI averaged $94.90 a barrel in 2022 and $65.39 in 2025 (EIA, Oct 2026).
- The annual average WTI price rose 74% from 2020 to 2021 (EIA, Oct 2026).
- Henry Hub gas averaged $6.45 in 2022, then $2.53 in 2023 (EIA, Oct 2026).
- Monthly Henry Hub prices ranged from $1.49 to $8.81 between 2016 and 2025 (EIA, Oct 2026).
- The 10 year Treasury yield averaged 4.99% in September 2026 (Federal Reserve via FRED, Sep 2026).
- The bank prime loan rate averaged 6.87% in September 2026 (Federal Reserve via FRED, Sep 2026).
- NARO calls 36 to 60 times monthly cash flow informal triage, not an appraisal (NARO, Oct 2026).
- NARO advises getting several offers because mineral markets can be opaque (NARO, Oct 2026).
- The IRS taxes oil and gas royalties as ordinary income (IRS, Publication 525, Oct 2026).
How does a cash offer compare with keeping your royalties?
Discount each future month of royalties back to today under assumptions you choose, add them up, and set the total beside the offer. The worksheet below does that arithmetic and leaves every assumption to you.
Sell or keep worksheet
Enter a real written cash offer and your own assumptions. Nothing is filled in for you, nothing is sent or stored, and the result is arithmetic on your inputs, not a valuation.
Three scenarios, each with your own annual decline in the checks and your own price change against today. A decline of 20 means each year pays 20 percent less than the year before.
| Scenario | Annual decline, percent | Price change against today, percent |
|---|---|---|
| Scenario 1 | ||
| Scenario 2 | ||
| Scenario 3 |
Enter the offer, the monthly royalty, the years and the discount rate, then at least one scenario.
What does the worksheet calculate?
It turns your annual decline and discount rate into monthly rates, projects each month's check, and discounts it back to today.
- Each month's check equals your current monthly royalty, adjusted by your price change and reduced by your decline rate converted to a monthly factor (American Mineral Registry worksheet, Oct 2026).
- Present value is the sum of each month's check divided by one plus the monthly discount rate, raised to the number of months ahead (American Mineral Registry worksheet, Oct 2026).
- NARO describes the income approach as estimating future production and income, then discounting it for the time value of money and for risk (NARO, Oct 2026).
- NARO says producing interests and those near drilling are generally valued above those that depend on distant, uncertain development, because money received sooner is worth more (NARO, Oct 2026).
Which rules of thumb should not replace the arithmetic?
NARO treats quick multiples as a first screen at most, and warns against treating a buyer's number as a valuation.
- NARO describes a rule of 36 to 60 times monthly cash flow for producing minerals as informal triage, not an appraisal, because royalties can fall quickly as wells age (NARO, Oct 2026).
- NARO calls
double the highest unsolicited offer
the least reliable heuristic and says offers should be compared on identical terms (NARO, Oct 2026). - NARO lists treating a buyer's estimate like an appraisal as a common pitfall, because buyer models are designed for bidding (NARO, Oct 2026).
- NARO advises obtaining several offers before selling because mineral markets can be opaque (NARO, Oct 2026).
Putting two offers on the same terms before comparing them is covered in compare mineral rights offers.
What does the worksheet leave out?
It counts only the years you enter and only the wells already paying, and it ignores tax, although a sale and royalties are taxed differently.
- The IRS says royalties from oil, gas and mineral properties are ordinary income, generally reported on Schedule E (IRS, Publication 525, Oct 2026).
- Publication 525 says selling your complete interest in oil, gas or mineral rights is a sale of section 1231 property, which may get capital gain or loss treatment in certain circumstances (IRS, Publication 525, Oct 2026).
- Publication 525 says that if you keep a royalty, overriding royalty or net profit interest for the life of the property while assigning other interests, the cash received is ordinary income subject to depletion (IRS, Publication 525, Oct 2026).
- NARO names the lease royalty rate and post-production deduction terms as factors that can raise or lower net royalty cash flow materially (NARO, Oct 2026).
How fast do royalties from new wells decline?
Fast at first. EIA data show oil from existing wells falling by about two fifths, and gas by about a quarter, within a year, and Eagle Ford wells losing most of their first-year output, before declines slow.
How much did output from existing wells fall in 2024?
Across the Lower 48, production from wells already online dropped by about two fifths for oil and a quarter for gas.
- Lower 48 crude oil from wells online in 2023 or earlier fell from 11.0 million barrels a day in December 2023 to 6.7 million in December 2024 (EIA, Nov 2025).
- Natural gas from the same wells fell from 115.4 to 88.4 billion cubic feet a day over the same twelve months (EIA, Nov 2025).
- Horizontal wells, which start at high rates and decline steeply, produced 94% of Lower 48 oil and 92% of its gas in December 2024 (EIA, Nov 2025).
These are totals across wells of every age, so a single owner's wells can fall faster or slower.
What did EIA find for individual Eagle Ford wells?
In south Texas, new wells lost most of their output in their first year and kept falling in the second.
- Eagle Ford wells showed first-year production declines of 60% to 70% (EIA, Sep 2014).
- Second-year declines rose from 30% for wells drilled in 2009 to nearly 50% for wells drilled in 2011 and 2012 (EIA, Sep 2014).
- Wells drilled since the start of 2014 supplied 48% of Lower 48 crude oil in 2015, against 22% for the comparable new-well share in 2007 (EIA, Mar 2016).
What happens after the steep early years?
Declines slow as wells age, which is why the decline you enter should match the age of your wells.
- EIA's decline curve method for its 2022 outlook fitted steep early declines to shale and tight wells and switched to an exponential decline once the monthly decline fell to 0.8%, which EIA equates to about 10% a year (EIA, Mar 2023).
- EIA moved its Drilling Productivity Report into the Short-Term Energy Outlook data tables from June 11, 2024 (EIA, May 2024).
Production for your own state and county is in oil and gas production by state.
How much did oil prices move from 2016 to 2025?
A lot. The annual average WTI price more than doubled from its 2020 low to its 2022 high, so the price you assume can move the result as much as the decline you assume.
What were the annual average oil prices?
Prices fell into 2020, peaked in 2022, and eased through 2025.
- The annual average WTI spot price was $43.29 a barrel in 2016, $65.23 in 2018 and $56.99 in 2019 (EIA, Oct 2026).
- WTI averaged $39.16 in 2020, $68.13 in 2021 and $94.90 in 2022 (EIA, Oct 2026).
- WTI averaged $77.58 in 2023, $76.63 in 2024 and $65.39 in 2025 (EIA, Oct 2026).
How large were the biggest oil price swings?
The largest year to year moves ran to nearly three quarters, and monthly prices moved further still.
- The annual average WTI price rose 74.0% from 2020 to 2021 and fell 31.3% from 2019 to 2020 (EIA, Oct 2026).
- Monthly WTI ranged from $16.55 a barrel in April 2020 to $114.84 in June 2022 (EIA, Oct 2026).
- In 2026, monthly WTI went from $60.04 in January to $102.13 in May and $97.31 in September (EIA, Oct 2026).
Monthly prices since 1986 are in oil and gas price history.
Did natural gas prices swing more than oil?
Yes, in this decade. Henry Hub prices rose by two thirds from 2021 to 2022 and then fell by three fifths, so owners of gas royalties face wider price scenarios than oil owners.
What were the annual average gas prices?
Gas prices sat between $2 and $4 for most of the decade, with one spike.
- The annual average Henry Hub spot price was $2.52 per million Btu in 2016, $3.15 in 2018 and $2.03 in 2020 (EIA, Oct 2026).
- Henry Hub averaged $3.89 in 2021, $6.45 in 2022 and $2.53 in 2023 (EIA, Oct 2026).
- Henry Hub averaged $2.19 in 2024 and $3.52 in 2025 (EIA, Oct 2026).
How large were the biggest gas price swings?
The annual average fell by three fifths in one year and nearly doubled in another.
- The annual average Henry Hub price fell 60.8% from 2022 to 2023 and rose 91.6% from 2020 to 2021 (EIA, Oct 2026).
- Monthly Henry Hub prices ranged from $1.49 per million Btu in March 2024 to $8.81 in August 2022 (EIA, Oct 2026).
- NARO lists commodity prices as a major value driver and says valuations typically use conservative, supportable prices rather than short-term spikes (NARO, Oct 2026).
What discount rate goes into the worksheet?
Your own. The rate stands for the time value of money plus the risk that the checks turn out lower than you hope, so it sits above a safe interest rate; published rates only mark the floor.
What does a discount rate stand for?
Two things at once: waiting for money, and the chance it does not arrive as planned.
- NARO says the discount rate reflects both the time value of money and the risk that prices, drilling timing, well performance, costs and title or lease issues turn out differently (NARO, Oct 2026).
- NARO says a mineral interest's value rests on expected future production and income, adjusted for risk and timing (NARO, Oct 2026).
Which published rates give a reference point?
Treasury yields and the prime rate are published daily, and neither carries the risk of a royalty.
- The 10 year Treasury constant maturity yield averaged 4.99% in September 2026, up from 4.68% in August (Federal Reserve via FRED, Sep 2026).
- The bank prime loan rate averaged 6.87% in September 2026, after 6.75% in each month from May to August (Federal Reserve via FRED, Sep 2026).
- The Federal Reserve's H.15 release showed the prime rate at 7.00% and the 10 year Treasury yield at 5.27% on October 6, 2026 (Federal Reserve, H.15, Oct 2026).
What a royalty check should be from production and your decimal is worked out in the oil and gas royalty calculator.
Methodology and Sources
On October 8, 2026, each figure was read on the page of the agency or association that published it; Figure 1 is AMR's worked example: EIA for well decline and prices, the Federal Reserve's H.15 release through FRED for interest rates, NARO for valuation practice, and the IRS for tax treatment. EIA price values were checked month by month against EIA's own history tables. Decline figures describe the wells and basins EIA measured, not any one owner's wells. Pages without a publication date carry the month they were read. The worksheet runs in your browser, sends nothing, and is arithmetic on your inputs, not an appraisal or advice to sell. Rates and prices are refreshed when the agencies publish new data.
Glossary
- Present value: what a stream of future payments is worth today after discounting each payment for the wait and the risk.
- Discount rate: the yearly rate used to shrink future payments to today's dollars.
- Decline rate: how much a well's production falls from one year to the next.
- WTI: West Texas Intermediate, the U.S. benchmark crude oil price, quoted at Cushing, Oklahoma.
- Henry Hub: the Louisiana pipeline hub whose spot price is the U.S. benchmark for natural gas.
- Horizontal well: a well drilled down and then sideways through the rock layer, which starts at high rates and declines steeply.
- Section 1231 property: the tax category the IRS uses for business and income property, including a complete mineral interest when sold.
- Post-production deductions: costs an operator takes from royalties for gathering, treating or transporting oil and gas.
- Rule of thumb multiple: an offer expressed as a number of months of current royalty income.
Sources
- EIA: Production Decline Curve Analysis in the Annual Energy Outlook
- EIA: Cushing, OK WTI Spot Price FOB, annual
- EIA: Cushing, OK WTI Spot Price FOB, monthly
- EIA: Drilling Productivity Report
- EIA: Henry Hub Natural Gas Spot Price, annual
- EIA: Henry Hub Natural Gas Spot Price, monthly
- EIA: Today in Energy, New Eagle Ford wells continue to show higher production
- EIA: Today in Energy, Rapid declines from horizontal wells require more drilling to sustain production
- EIA: Today in Energy, Wells drilled since start of 2014 provided nearly half of Lower 48 oil production in 2015
- Federal Reserve: H.15 Selected Interest Rates
- Federal Reserve Bank of St. Louis: Bank Prime Loan Rate (MPRIME)
- Federal Reserve Bank of St. Louis: Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity (GS10)
- IRS: Publication 525, Taxable and Nontaxable Income
- NARO: The Mineral Owner's Guide, Calculating the Value of Your Mineral Rights
- American Mineral Registry: Sell or keep worksheet