As oil companies continue to cut, slash and reorganize, as they wait for the oil prices to rebound, we are wondering how this volatility is affecting you.
Has your leasing company gone bankrupt? Are you confused by what it all means? Have the checks stopped coming?
Or…it is business as usual?
Royalty Holder in McMullen County, checks tapering down to nothing, no new wells scheduled by Petrohaak/BHP Billiton, and Wapiti/Clearly Energy. I’m sick of the Big Oil companies not using their considerable leverage,
to fight what the Saudis are doing to the price of oil. They appear impotent. Where is the “fighting American spirit”? Did Obama destroy it?
‘Checks tapering down to nothing’…ouch. Thanks for sharing, Michael.
Checks are still coming, but drastically reduced in Ward County and Reeves County, Texas. Supposedly two new wells drilled in Ward County, Block 34, Sections 74 and 98 (circa 12/2014, I think), but I have no idea about completion or production and my computer is down so no way to check it out. If anyone has any info in this regard I’d love to hear it. Hope things get better soon… Linton
Checks still coming in, production reduced because of oil pricing and waiting for pipeline in Loving County.
Oil royalty income is down about 40% from last Fall.
A law passed, I believe when Carter was president, prevents unrefined crude from being sold on world markets. I wish Congress would revoke it. Heck I own a working interest and costs to produce remain the same even when price drops.
robert lipton said:
There is overproduction because American light crude can’t be sold on world markets. A law passed, I believe when Carter was president, prevents unrefined crude from being sold on world markets. I wish Congress would revoke it.
I feel your pain, but oil companies are driven by ROI’s. If they drill a well, they need to make their money back, and then some, or it isn’t worth drilling. Given the current price environment, it doesn’t make sense to drill and complete expensive horizontal wells.
The big oil companies don’t have the leverage to fix price fluctuations (if they did, oil would never have dropped to $10/bbl in the late 90’s), so they can only respond to price environments.
Michael Ambler said:
Royalty Holder in McMullen County, checks tapering down to nothing, no new wells scheduled by Petrohaak/BHP Billiton, and Wapiti/Clearly Energy. I’m sick of the Big Oil companies not using their considerable leverage,
to fight what the Saudis are doing to the price of oil. They appear impotent. Where is the “fighting American spirit”? Did Obama destroy it?
Our revenue has dropped in proportion to the drop in crude prices. Like Mike Igau said, they’re about 40% of what they were when crude prices peaked, and exactly what we predicted when we began to watch the fall in prices. Nothing out of order in what we’re seeing, at least, not so far.
Re: American light crude not being sold overseas…from what I understand, the main issue is with regard to our refineries being tooled for the heavier, sour crudes. One size does not fit all. A more flexible energy plan for America would include refineries that can process more than one type of crude.
Well stated, Allen. It continues to amaze me that some people blame dropping oil prices on the POTUS, as if he were the God of All the World Economy. It’s almost comical but those people vote…scary thought.
Allen Lassiter said:
I feel your pain, but oil companies are driven by ROI’s. If they drill a well, they need to make their money back, and then some, or it isn’t worth drilling. Given the current price environment, it doesn’t make sense to drill and complete expensive horizontal wells.
The big oil companies don’t have the leverage to fix price fluctuations (if they did, oil would never have dropped to $10/bbl in the late 90’s), so they can only respond to price environments.
Michael Ambler said:
Royalty Holder in McMullen County, checks tapering down to nothing, no new wells scheduled by Petrohaak/BHP Billiton, and Wapiti/Clearly Energy. I’m sick of the Big Oil companies not using their considerable leverage,
to fight what the Saudis are doing to the price of oil. They appear impotent. Where is the “fighting American spirit”? Did Obama destroy it?
Checks still coming. Six new wells coming on line in December and January have overcome reduced crude prices, making our net royalty income at least equal to that before the bust. No existing wells have been shut down. We are in the Bakken. Drilling on planned new wells has not started and maybe never will. We hope our primary oil company knows what they are doing.
Our royalty checks (Properties in Andrews County, Texas) have been slashed by 50% and the mineral interest property tax appraisals have been slashed by 50%. Since the oil price collapse, companies interested in purchasing our mineral rights via letters have dropped from 3-4 monthly to one every 4 months. Simply put, any purchases of mineral interests within the past few years are now in the loss category.
This is nothing unusual folks. The oil and gas industry always goes up and down. I’ve been working in it since 1982 and, for as long as I can remember, oil and gas has never changed its movements.
Revenue is down at least 40% Grady County, Oklahoma wells. We did get offers to buy Reeves County, Texas lease for $2000 an acre. Someone isn’t worried that things will improve price-wise if they are offering that much? Just IMO.
Obviously, U.S. banks are preparing for a massive U.S. energy revolution. Yesterday, “Bank of America hired Brad Hutchinson from Barclays Plc to co-head its Americas energy investment banking business. The Barclays investment banking franchise has been a powerhouse in energy investment banking.” Bank of America will loan money to strong energy companies that survive the current downturn. http://www.reuters.com/article/2015/06/01/moves-bank-of-america-hutchinson-idUSL1N0YN1CD20150601
We don’t think the company is bankrupt, we are not confused, and the checks are still coming.
They are, however, much smaller, understandable.
We were fortunate to have received royalty payments and expect to continue receiving them. It was not our only source of income, so we are not hurting as much as other people.
Have not received a royalty in 4 months and they were 3 months behind back then. They are at least 6 months behind. I have complied with lease agreement and sent written notice of their lack of payment. What do I do next? Hire a lawyer?
Key word “strong energy companies.” What if my small owner/operator doesn’t qualify as strong? Will they find residual benefits from the scenario you mentioned? Thanks.
Martha McMorries said:
Obviously, US banks are preparing for a massive US energy revolution. Yesterday, “Bank of America hired Brad Hutchinson from Barclays Plc to co-head its Americas energy investment banking business. The Barclays investment banking franchise has been a powerhouse in energy investment banking.” Bank of America will loan money to strong energy companies that survive the current downturn.
http://www.reuters.com/article/2015/06/01/moves-bank-of-america-hutchinson-idUSL1N0YN1CD20150601
Agreed. Having worked within the industry, this is a given. However, operators should not be allowed to withhold payments to royalty owners because they were leveraging with mineral owners’ money. Not our problem… or is it? Hmmmph. Lesson learned, don’t lease to small company.
Martha McMorries said:
This is nothing unusual folks. The oil and gas industry always goes up and down. I’ve been working in it since 1982 and, for as long as I can remember, oil and gas has never changed its movements.