Mineral Rights Forum

America’s conversation place for mineral owners

Overall, 2015 was a bust for the oil and gas industry. It has forced U.S. drillers and operators to cut down capital budgets by the billions. Law firm Haynes and Boone LLP on Dec. 4 released its “Oil Patch Bankruptcy Monitor,” which tracked 37 U.S. oil and gas bankruptcies in 2015, including 17 in Texas. Investment research firm Morningstar expects this downturn to continue all through this year and that near-term prices could be “ugly.” David Zusman, managing partner and chief investment officer at Talara believes the industry is sorting itself out and said “What we learned in 2015 is the industry is all about cost structure, and the downturn is separating those that can produce efficiently and those who can’t.”

There were a total of 840 active rigs in Texas last January, a number that is now cut down to 321. In the Eagle Shale, the number of active rigs has gone down from 200 to 76.

Idle rigs are stacked, in a field east of San Antonio. Allen Gilmer of Drillinginfo said “idle equipment now sitting in the fields is damaged from lack of routine maintenance and might never go back to work.”

Because of this down turn many legal disputes have risen over royalty payments, with more mineral owners requesting audits to make sure they’ve been paid correctly.

Attorney Marty Truss of Dykema Cox Smith said “As the checks get smaller, people look at them a lot closer.”

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