How Oil Price Swings Impact Mineral Valuations in North Dakota

North Dakota’s Bakken Formation has been one of the most productive oil plays in the United States over the last two decades. For mineral and royalty owners, the value of their assets is closely tied to oil prices. When prices rise, buyers and operators are eager to acquire acreage; when they fall, valuations can drop significantly. Understanding how oil price swings influence mineral valuations is critical for owners deciding whether to sell, hold, or lease their interests.

Oil Prices and Mineral Valuations: The Connection

The value of mineral rights is driven primarily by the expected future cash flow they can generate. Oil prices directly impact those cash flows in three ways:

1. Royalty Payments – Higher oil prices increase the amount paid to royalty owners per barrel produced.

2. Operator Activity – Strong pricing encourages drilling and leasing activity, while lower prices may cause operators to slow development.

3. Market Demand for Minerals – Investors and acquisition groups typically offer higher prices for minerals when commodity markets are strong.

Historical Examples in North Dakota

• 2008 Price Spike: When oil exceeded $140 per barrel, mineral valuations in the Bakken surged as operators expanded drilling programs.

• 2014–2016 Downturn: A sharp decline in oil prices below $40 per barrel caused valuations to drop dramatically, with many buyers exiting the market.

• 2020 Pandemic Collapse: Demand destruction drove prices into negative territory briefly, freezing mineral transactions.

• 2021–2022 Recovery: A rebound in global demand pushed oil above $100, renewing strong interest in North Dakota minerals.

These historical swings show how quickly mineral valuations can shift alongside oil market cycles.

Factors That Influence Sensitivity to Price Swings

Not all minerals react the same way to oil price changes. Key factors include:

• Location – Acreage in proven core areas of the Bakken tends to hold value better during downturns.

• Development Stage – Minerals already under production are less risky than undeveloped acreage.

• Operator Presence – Acreage near active, well-capitalized operators is more attractive to buyers.

• Lease Terms – Royalty percentage, lease length, and deductions can amplify or reduce the impact of price swings.

Selling vs. Holding in Volatile Markets

For mineral owners, oil price volatility presents both risks and opportunities:

• Selling during strong price cycles can lock in higher valuations and provide immediate liquidity.

• Holding during downturns may allow owners to ride out the cycle and benefit from a recovery in royalties and asset value.

• Partial sales are also common, allowing owners to capture today’s value on a portion of their minerals while retaining upside potential.

The North Dakota Outlook

North Dakota remains one of the top oil-producing states, and long-term demand for domestic energy keeps the Bakken relevant. However, ongoing regulatory changes, global energy transitions, and commodity cycles mean mineral owners must remain informed and proactive.

Oil price swings will always play a central role in mineral valuations across North Dakota. Understanding how market cycles influence royalties, buyer demand, and long-term development potential is essential to making informed decisions.

👉 If you’re a North Dakota mineral owner evaluating whether to sell, lease, or hold, reach out to 1280 Royalties for a free, confidential valuation. Our team provides transparent insights so you can make the best decision for your family and financial goals.

👉 Fill up this form and a mineral specialist will reach out to you directly.

Disclaimer: The content on this website is provided for general informational purposes only and should not be considered legal advice. While we strive to ensure the information is accurate and up-to-date, laws and regulations can change, and circumstances vary. For advice tailored to your specific situation, we encourage you to consult a qualified legal professional.

About 1280 Royalties
1280 Royalties is a trusted mineral acquisition company that helps owners across the country maximize the value of their mineral rights. With a proven track record and personalized approach, we guide each client through a friendly, professional, and confidential process—from evaluation to closing.