When an oil company has hedged or locked in some of its production for 2015 what price does the royalty owner receive? The locked in price or market price?
Should be what the company receives, your royalty portion thereof.
I haven't looked at my leases but I am guessing the market price because those hedges cost the oil company alot of money so why should the royalty owner benefit from the hedge price when the owner has zero contribution to expenses?
Hedges are a gamble that the price of oil will go down and that the company with many wells can fill the production sales contract at a pre agreed price. If a royalty owner doesn't want to take advantage of the producer's ability to hedge, the royalty owner can take, store, market and sell its share of well production. A very costly and time consuming task so rarely done. Most leases read that the owner can share in what the operator receives regardless of how or when it is done. Nancy's go the right idea.
Try the search feature in the upper right corner. There have been prior threads on this. Essentially, it depends on what your lease says, but the large majority of leases pay based on the actual price received regardless of any hedge contracts.