Still need educated opinions on the "lasting power" of oil and natural gas wells in the Permian Basin area. I have interest in producing wells but don't know if they are about to run out or if they will keep going for years.. They are in the Burch Keeley and Greyburgh Units near Bottomless Lakes in N.M.
I read one article written in 2000 saying that the Permian Basin had about 50 years of oil and natural gas left in it.. Now, I guess that would be 40 years. If that is true, that's fine but if the deposits will run out in 20 years, I'm in trouble since I'm basing a house and other purchases on how much they earn me a month.
Does anybody at all have any knowledge about when these wells might be due to run out? I know they have been producing for my family since at least the 1960's. Just a general answer would be appreciated.
Lynn Barker
Lynn,
About every 20 years, someone reports that we will run out of what ever resource they have studied in 20 years. This has been going on for at least 3 - 20 year cycles that I know of and will probably continue for many cycles after we are long gone. With continued drilling, new technology and economics, the Permian Basin resource has probably increased dramatically since 2000 not declined.
That is not to say that the units you are in won't reach an economic limit and since nobody knows when that will be, you should save your mineral income for a few years depending on your life expectancy, then spend 25% or so of the account balance every year. You will have control of your mineral earnings and will not be dependent on factors beyond your control. You will also never run out of a balance in your savings account.
The failure rate of meeting mortgages with anticipated oil and gas income is very high in my experience with clients. I've never done that in 35 years of royalty and working interest income and I'm in the business.
Be careful to only spend what you have in the bank and no more where minerals are concerned or you may be forced to sell those minerals someday when you don't want to.