restarting leasing process for both Gulf of Mexico and onshore after an adverse Federal Court decision
I have been accepted as an expert witness in US Federal Court for the Western District and testified in a trial before Judge Doughty. His ruling in this particular matter is not surprising and aligns with prior decisions on his part. I'll also point out that louisianarecord.com is a purveyor of industry propaganda, a PR firm if you will. I get their regular emails.
A pause in "leasing" has no substantive near term impact on industry exploration and production. The industry holds millions of acres leased from the federal government in decades past that are not being explored or produced. They are "banked" for potential future exploration and many will be found to not be economic but they were acquired and maintained for a pittance so are worth that risk. What louisianarecord.com and other industry promoters hope is that the public conflates a pause in "leasing" with a pause in "permitting wells". The moratorium has no substantive impact of current drilling programs.
Anyone who is a private owner of mineral rights should have no problem with any moratorium on "leasing" as it potentially supports the commodity prices they receive from existing production of oil and natural gas. . . as long as producers maintain some semblance of self restraint. The problem, for industry and for royalty interests, throughout the "shale age" has been robust supply and depressed prices.
I've wondered where to post this outside of a stand alone discussion and I think this is as good a place as any.
The natural gas settlement price for physical gas September delivery is $4.37/mcf. Keep in mind that this is a "basis" price and the actual price on royalty statements will vary. The sales price based on the September settlement should be applicable to royalty revenue received on November statements. If you have a recently completed well or wells that have not shown up as yet on your royalty statement, that could be a very nice royalty payment just in time for the holidays. Early Merry Christmas
I vote to put it on a separate discussion like the well rig count or put it on that discussion on the first page. That way the information is easily located. I get a lot from watching trends. Right now I follow futures which indicate to me if the price is headed up or down as well as the Henry Hub spot prices which are a fairly good indicator what the royalty payments should be. Your facts are always appreciated.
You're welcome, Greg. At one point Keith had a website widget that showed the daily futures price. As I have pointed out on occasion, the monthly settlement price is more meaningful for royalty owners comparing the settlement price to the mcf price on their statements. I have some catching up to do since I have been in court all day Monday and Tuesday but will consider starting a settlement price discussion using the same format as the weekly rig report. It's always nice to get feedback from members on the content they would like to see included on the website.
so, I would love to see that as well. About a year ago, I started comparing the gas prices on my royalty checks (I have several small interests scattered around DeSoto and Sabine Parishes) every month. I was surprised that this month's checks, for May gas sales, were still in the $2.60 -2.80 range. Would have thought that they would be higher.
Okay, that's two votes. I'll check later, still a lot of grass to mow.
so, this "poll" is sorta buried under a post on drilling moratoriums. Would you consider starting a separate post directly related to royalty prices versus all of the other stuff we see on gas prices?
Yes, when I finish cutting the grass. LOL! And after dinner. Court can be disruptive to my one person household especially the grass part.
Skip, Thank you so much for starting the new post. I am always gathering data to pass on to the younger generation and it is a lot easier if I can just show them a post that they can monitor.
Steve, Here is what I use to track pricing and supply/demand.
https://money.cnn.com/data/markets Scroll down to gas. It is the futures price and gives an indication as to the direction of pricing seen in royalties. You will never see this price.
https://www.eia.gov/dnav/ng/hist/rngwhhdm.htm Henry Hub Natural Gas Spot Price. The monthly average is usually a little higher than what I have observed, but is close to the royalty payments.
https://ir.eia.gov/ngs/ngs.html Weekly Natural Gas Storage Report. Shows supply/demand which will also impact price which gives a reason of the price going up/down.
Skip wrote about the different pricing about a month ago but I can not find it. That is why I would like a dedicated location for the settlement prices to see how that falls in line with royalties along with his words of wisdom.
You're welcome, Greg. I advise all my clients regardless of the size of their mineral assets to make a "mineral folder" with all the pertinent title documents, copies of leases, all lease correspondence, any follow on correspondence with operators and instructions on the need to properly file succession docs in all jurisdictions where production occurs. Once the folder is compete with the basic legal instruments, I suggest going over it with all heirs and, if need be, designate one to be the family "mineral manager". It is also quite helpful for that individual to know some basics of navigating public records such as state O&G databases. For the majority of mineral owners, there is only a handful of basic searches that are relevant. In order to "manage", one should be "informed". Good luck.