Looking at my July royalty check I see the PPB has dropped to just over $55 while the May and June sales were just over $63 PPB . Has the price in Reeves County dropped that drastically in one month ? Should I be asking the Parsley Energy folks what gives ?
Many operators are experiencing a large fee to get the oil into the pipelines because there is not enough pipeline capacity to carry the oil. Small operators and those who did not hedge prices are hit more than large operators with their own pipelines or who hedged 2018 oil pricing. New pipeline construction should be open in mid 2019 to 2020. Operators are discussing this problem and there have been articles in Midland paper. Still, you should ask Parsley about the prices that it is receiving for current production.
Expect wild fluctuations of the price per barrel of oil on your royalty checks for some time to come as more and
more oil transport lines are built and commissioned. The price IS driven by access fees to the pipelines
at the wellhead.
Drilling and completion of new wells with high volume outputs is far outstripping the completion and commission of new oil and gas gathering/transportation pipelines and no matter what the WTI price
goes to in worldwide trading, the net you get paid your royalties from is going to be substantially lower
than the published WTI price.because of those access to pipeline fees.
ol’ Lawrence in Verhalen
Thanks Lawrence. Found this article which talks about the situation
Along with this earlier article
Sometimes there can be too much of a good thing !