Royalty Owners at Risk of Being Over-Appraised on Oil and Gas Wells in Texas

Tricia Davis, President, Texas Royalty Council

This week, the Texas Royalty Council (TRC) was made aware of a potential oil price miscalculation that could lead to royalty owners being over-appraised on oil and gas wells in Texas.  Royalty owners who receive an appraisal from Pritchard & Abbott, Inc. are encouraged to contact the firm immediately (817-926-7871) to verify the oil price used in their appraisal.  

For Texas property tax valuations, Section 23.175 of the Property Tax Code requires that the actual 12 month average price received by an oil and gas lease for the prior year must be used in the calculation of the mineral interest’s taxable value. For 2016, Pritchard & Abbott, Inc. has opted to ignore the law and has used the 2015 average West Texas Intermediate (WTI) “Reference Price” instead of the actual prices received by the lease.  In most instances, this will lead to over appraisal of the mineral interest’s 2016 taxable value. 

Royalty owners should prepare to protest if they are impacted by the miscalculation.  Failure to do so could lead to your mineral interest(s) being over-appraised, thereby increasing your taxes paid.  

The deadline to file a Property Appraisal – Notice of Protest is quickly approaching and could be as early as May 31, 2016. Specific deadlines for each county are stated on your Notice of Appraised Value. 

The map shows a list of county appraisal districts represented by Pritchard & Abbott.  For more information on county appraisal districts represented by the firm click here.