Introduction

It would be well to define the terms under consideration in the title of this paper. "Value" is derived from a Latin word "valere" which means "to be strong, be worth." As defined by Webster in an economic sense, value is "the monetary worth of a thing; the marketable price,"and valuation is "the value set upon a thing; the appraised price."

"Undrilled Acreage" as used here means any land which has not had its petroleum producing possibilities tested by the drilling of a hole thereon. The subject for discussion concerns the various elements which influence the value of acreage not previously tested for petroleum by the drill.

Evaluations of undrilled acreage are made for many purposes. They are made every day by any oil or gas company or individual who acquires acreage for the express purpose of obtaining possible petroleum producing acreage. Consciously or subconsciously the price that a company landman is willing to pay for such acreage is the composite of a number of factors that must be considered, and from which emerges an answer in the form of a definite value, such as "tendollars per acre."

In addition, appraisals of undrilled acreage are made for tax purposes, for disposition of estates, for dissolving partnerships, and for many other reasons. In many of these situations, it is necessary for an appraiser to arrive at a value for undrilled acreage when no value has been established by an offer from a buyer. In such instances, the appraiser usually attempts to view the property on the assumption that there exists a willing buyer and a willing seller. This assumption is further defined by same appraisers as a"willing buyer and a willing seller, in similar tax situations." In such case, the value placed on the property is in the final instance only an opinion of the appraiser, and is not a figure tested as a result of negotiation between a buyer and seller.

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