Mineral rights are a type of resource that must be evaluated for eligibility. Use this guide to determine if they count and how to find their Fair Market Value (FMV).
- Is the Mineral Interest Countable?
- Excluded: If the minerals are part of the client’s home property (and the home is excluded), the minerals are also excluded.
- Countable: Minerals not associated with the home property are considered a resource.
- Temporary Exclusion: You can temporarily exclude the value if the client is making a “good faith effort” to sell the interest.
- Determining Fair Market Value (FMV)
Values must be updated prior to certification and at every annual renewal.
| Category | Documentation Needed | Valuation Method |
| Working/Producing(Paying Royalties) | Prior year’s 1099 or Schedule E tax form. | Use the OKDHS formula. If you are comfortable, calculate it yourself. If not, staff with supervisor and send it to AFS.MineralRights@okdhs.org if needed. Use email subject: “FMV Mineral Interest Request”. |
| Non-Producing
(No Royalties) |
Two (2) FMV estimates from knowledgeable sources (e.g., landman, banker, realtor), which must be reviewed by AFS.MineralRights@okdhs.orgfor the final FMV. | Note: Only request these 2 outside estimates if the client disagrees with the value OKDHS Legal provides. Average the two estimates. If they differ widely, staff with your supervisor but remember the final FMV will come from AFS.MineralRights@okdhs.org. |
| Leased (Bonus Paid, no Royalties yet) | Legal description and the 1099 from the year the lease bonus was paid. | Use the gross “rents” box on the 1099. |
- Key Rules for Eligibility Workers
- Legal Descriptions: Always provide the legal description for all cases, whether the minerals are leased or not. If you absolutely cannot find it, you can proceed but make every effort to include it if it’s available.
- Net Mineral Acres: If the interest is not leased, you must have the legal description and the number of net mineral acres owned.
- Unknown Acreage: If the net mineral acres are unknown, use the total acres listed in the legal description.
- Calculating Value: You are encouraged to calculate the FMV yourself using the OKDHS formula. However, if you are unsure or uncomfortable with the calculation, send the information to MineralRights@okdhs.org for help.
- The $6,000 / 6% Rule: Up to $6,000 of equity in royalty-producing minerals can be excluded if the net annual return is at least 6% of that equity.
Disputing Value: We always use our formula/OKDHS Legal value first. If the client disagrees with our result, they have the right to provide two (2) outside FMV estimates from credible sources for us to review or request a fair hearing.
- Communication Protocol
- All emails sent to MineralRights@okdhs.org must follow these rules:
- Copy Management: You must CC your Supervisor, Field Manager (FM), District Director (DD), and HR&MS.
- Subject Lines:
- Standard Valuation: Use “FMV Mineral Interest Request”.
Pending Hearing: Use “HEARING-MINERAL INTEREST VALUATION”.
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