Natural Gas prices


#1

Hello, I own quite a bit of mineral rights with the majority of it being natural gas. I i herited a majority of my mineral rights around 2015 and the price on natural gas has been pretty low since i have received them. I have seen over the past two month the price of natural gas selling in the market per barrel rise greatly. My question is should I be seeing a direct correlation between what i am getting paid for my natural gas mineral interest and the price per barrel in the market place. I want to make sure I am being paid fairly and do not want to miss out on any oppertunities. Is there a way where i can tell what i should be making rather than just relying on the gas companies word?


#2

Oil is an international product and is priced accordingly based upon several components such as gravity, sulphur content, etc.

Gas is priced independently and is a US market for the most part. Your operator has contracts with the pipelines and so they vary widely depending upon the area of the country, the wetness or dryness of the gas, contaminants, etc. Unless your lease language has a clause that allows you to know their pricing technique, you do not get to know how that price is set.


#3

Hello Ms. Barnes,

Regarding your comment above, how can we know that we are receiving the “proper” amount for our NG royalties? It seems that if there is no transparency, how can we trust the producer? Is there some audit or checks and balance in place to keep everyone honest?


#4

There is no transparency. Occasionally, they have audits. You can keep track of the gross production on individual states websites (in some cases) and compare to your check stubs. Gas is usually several months behind. And it is often recalculated periodically based on gas oil ratios and meter readings. Unless you have a clause in your lease that demands that they tell you how they calculated is, you are pretty much in the dark.


#5

Thank you for your response.