With the steep decline in crude oil prices due to both the Russia/Saudi disagreements on production and the obvious demand loss with the coronavirus spread, does this affect the price of NGL’s by a similar amount or are they more in demand? The leases we hold are with Southwestern in Marshall County, WV in the Liberty District which is known to be a “Wet Gas” area. Wells are permitted in our area and drilling was supposedly scheduled to commence this month. Any insight relative to NGL pricing in this type of scenario much appreciated.
NGLs usually follow gas closer than oil, so it’ll likely be a blend. Gas trends have been heading south for a while so if the operator wasn’t worried before, they might not be still (unless they were relying on oil production to fund the drilling).
I’ve seen some articles predicting the oil slump will be good for gas prices as it should reduce the gas supply some if operators hold off on drilling oil wells (that have associated gas) for a bit. There’s a potential for a reduced supply. But all of that probably won’t happen for a while. In the meantime, the same reduced energy demand due to the coronavirus ordeal is affecting gas and NGL markets.
Thanks Tracy for the reply.