What type of rule state is West Virginia in terms of determining the default point of valuation for royalties?

West Virginia is classified as a marketable product state when determining the default point of valuation for royalties. In this context, "marketable product" refers to the obligation of the producer to sell the oil or gas from the well at a point where it is sold in the market, which establishes the valuation of the product for royalty calculations.

The marketable product approach considers the value of the product as it would be sold on the open market, typically at the wellhead or at a specific point of sale agreed upon in the lease agreements. This means that royalties are calculated based on the market price that the producer can expect to receive for the resource, allowing for a clearer reflection of the actual economic value received from the sale of natural resources.

This method supports transparency and fairness for the mineral owners, ensuring that the royalties they receive are closely tied to real market conditions. In states that utilize the marketable product standard, this ensures that the valuation of royalties accurately reflects what a willing buyer would pay in the open market for the resource extracted.