What to charge / acre for coal rights?

Discussion in 'Homesteading Questions' started by Michael W. Smith, Apr 5, 2005.

  1. Michael W. Smith

    Michael W. Smith Well-Known Member

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    At a tax sale 5 years ago, I bought 2 different parcels of coal rights only that came up for sale thinking down the road either 1. I could find a company to do the mining or 2. The person who owned the surface rights would want to buy them for themselves so they could have it mined, or to make sure it never got mined.

    Received a call from a guy that owns 60 acres of surface land, that he thought included the coal rights, but has now found out that I own them. He is interested in buying them.

    Does anybody know how much / acre coal rights are worth? This is for coal only, NOT oil and gas.

    I know for a fact that part of this land has already been mined 20 some years ago so some of the acreage still has coal on it, and some has been mined. I have no idea how thick the coal veins are, or how much is / was there.

    How much would you charge / acre?
     
  2. james dilley

    james dilley Well-Known Member Supporter

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    Try checking with the Coal companies and add 100% to the price.
     

  3. Darren

    Darren Still an :censored:

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    It might be worth talking to your local county assessor. The tax you pay is based on a valuation. I'm not sure how accurate that might be. This past year I had the opportunity to look at some coal info and old underground coal maps as part of a watershed project in the county. In this area the last economically minable coal was stripped. It's no longer worthwhile because of the seam thickness to mine what's left underground. I've seen coal rights listed in the sheriiff's tax sale and there were no takers at the auction. Eventually it defaults to the state. Then the state tries to sell it usually without success.

    Oil and gas rights are another matter.There's a regular group of buyers who bid on those rights. It's not unuusal to see 1/256 of the oil and gas rights sold off for a parcel. I have no idea who has the other 255/256
     
  4. Mike in Ohio

    Mike in Ohio Well-Known Member

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    Michael,

    The first thing to do is figure out what the deal actually is. Is the 60 acres the whole of the coal rights that you purchased or only part of it? Will you have to pay any fees to subdivide the interest? What fees will you have to pay to record and transfer the interest?

    The next step is to figure out your basis. What did you pay including all fees? What taxes have you paid over the holding period? The next step is to figure out what a reasonable rate of return is.

    Then look at the marketplace. Try to find out from your county office (auditor? treasurer?) what other coal rights have transferred for in recent years.

    Someone owns the deep coal rights on our farm. At some point I've been meaning to track down the owners and try to buy it. I don't think the coal rights (at this point) on our place are worth much. It stipulates the depth of the seam and does not allow surface mining. Who knows down the road.

    I'd think the value to him is to prevent someone from mining. So it isn't the value of the coal but the value to him of someone not mining the coal (unless he owns a mining company).

    Hope this helps you to figure things out.

    Mike
     
  5. Michael W. Smith

    Michael W. Smith Well-Known Member

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    Thanks for your replies. My cost for 123.90 acres of coal rights? Are you sitting down?!? $1.00. I had gone to a tax sale, and once properties go through it and haven't received a bid, they end up that a person can bid $1.00 and own them. Now I did have filing fees of about $30.00, and the taxes per year is $4.36 X 5 years = $21.80, so altogether I have about $52.80 in it.

    This property used to be a farm which was subdivided, and like I said before, part of it has already been mined. I figured the guy wanting to do the buying can pay for the fees to get the coal rights subdivided, as I think I want to hang onto the other 63.90 acres unless he is interested in all of it.