(1) The actual value of severed nonproducing oil or gas or oil and gas mineral interests shall be determined by the income approach capitalizing the annual net rental income for such nonproducing mineral interests at an appropriate market rate. If such severed mineral interests are unleased, the assessor shall use the average per acre annual rental of all such mineral interests under lease in the county or in the area to determine the actual value thereof. (2) For the purposes of this section, "annual rental" means annual rental payments, or other compensatory payments payable for the right to hold a mineral interest, which payments are fixed and certain in amount and payable periodically over a fixed period calculated on a twelve-month basis. "Annual rental" shall be the representative annual rental for such mineral interests leased within the county or the area, and "annual rental" does not include royalty payments, advanced royalty payments, bonus payments, or minimum royalty payments covering periods when the mineral interests are not in production, even though said payments may be fixed and certain in amount and payable periodically. For the purposes of this subsection (2), "royalty payments", "advanced royalty payments", and "minimum royalty payments" are payments attributable to a portion of the current or future mineral production of a mineral interest, paid for the privilege of producing minerals, and "bonus payments" means compensation paid as consideration for the granting of a mineral lease or other compensatory payments which are payable regardless of the extent of use of the mineral interest and which are fixed and certain in amount and may be payable in one or more periodical increments over a fixed period.
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