In the mineral business, we categorize assets into two main buckets: :PDP and :NPRO.
Producing (PDP)
Proved Developed Producing. These are minerals that are currently generating a royalty check. There is a well on the land, it’s pumping oil, and the operator is paying you.
Producing minerals are:
- Easiest to value — We can see actual cash flow
- Easiest to sell — Less speculation involved
- Subject to :decline — Wells produce less over time
Non-Producing (NPRO)
Non-Producing Royalty Interest. These are minerals with no active wells. You aren’t getting a check.
Are they worthless? Not necessarily!
If you are in a hot area like the :Permian Basin or the :Eagle Ford, your non-producing minerals could be worth more per acre than producing ones in a tired field. Why? Because we’re betting on future wells—and new wells produce at peak rates.
The Risk: If no one ever drills, they generate zero return. Buying NPRO is a speculative bet for us, but it provides immediate cash for you.
The Best of Both Worlds: :PUD
Some minerals are currently producing AND have permits for new wells. These are the most valuable—established cash flow plus upside potential.
How We Value Each Type
| Type | Valuation Method |
|---|---|
| PDP | Multiple of current cash flow (typically 3-5x annual royalty) |
| NPRO | Acreage value based on location and drilling activity |
| PUD | Hybrid: cash flow + discounted future value of permitted wells |
:pdp
Proved Developed Producing. Industry shorthand for minerals that are actively generating revenue right now. The “proved” means reserves have been confirmed by production data.
:npro
Non-Producing Royalty Interest. Minerals that aren’t currently generating income. Value depends entirely on the likelihood of future drilling.
:decline
The natural reduction in oil production from a well over time. A typical shale well might produce 70% less in year two than year one.
:permian
The Permian Basin in West Texas and New Mexico—the most prolific oil-producing region in the United States and the primary focus of American energy investment.
:eagle-ford
A major shale formation in South Texas, known for high-quality oil and consistent drilling activity from operators like EOG and Devon.
:pud
Proved Undeveloped. Reserves that are known to exist (based on nearby wells) but haven’t been drilled yet. These locations are on the operator’s development schedule.