How much better off would we be ?
With the current economic struggle that has gripped our nation and the rest of the world as well, how much better off would we be not to be under production at this moment ? I know some money is better then no money, at the present time but what about later on ?
I am neither an oponent nor proponent to the decline curve analizations that have taken place thus far , mainly because I just dont fully understand the dynamics behind it. That being said , the studies that are ongoing by some of our qualified members are showing a drastic drop in production after the first year or two.
If that is the case , arent we missing our shot at great royalty checks by seeing our gas flow at half price compaired to when the market was stable ? I understand that we dont control the market or the prices. But many, that are feeling left out in the cold , due to not being under a lease at this time , could actually do better in the long run by not being produced at this time, couldnt they ?
Most of us know that the bonus isnt what should generate the income that makes a mineral owner his/her money. ( If an area is being produced as it should ). But most dont fully understand the impact that these troubling times will have on those royalty checks.
When we hear of the hedging that these companies use to protect themselves financially over the long haul, do they also help the mineral owner as well ?
Sorry I asked so many different questions at one time. Chip them off however you see fit. Thanks and have a great day.
I am neither an oponent nor proponent to the decline curve analizations that have taken place thus far , mainly because I just dont fully understand the dynamics behind it. That being said , the studies that are ongoing by some of our qualified members are showing a drastic drop in production after the first year or two.
If that is the case , arent we missing our shot at great royalty checks by seeing our gas flow at half price compaired to when the market was stable ? I understand that we dont control the market or the prices. But many, that are feeling left out in the cold , due to not being under a lease at this time , could actually do better in the long run by not being produced at this time, couldnt they ?
Most of us know that the bonus isnt what should generate the income that makes a mineral owner his/her money. ( If an area is being produced as it should ). But most dont fully understand the impact that these troubling times will have on those royalty checks.
When we hear of the hedging that these companies use to protect themselves financially over the long haul, do they also help the mineral owner as well ?
Sorry I asked so many different questions at one time. Chip them off however you see fit. Thanks and have a great day.
Views: 62
Replies to This Discussion
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Permalink Reply by ELLIS HUGH on
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It would benefit everyone (not just royalty owners) if the wells were producing when the price of NG was $10+. I think the key is how long do we have to wait for the 'long run'. I don't think many people want to wait until gas rebounds to $7+ to start receiving royalty checks, I don't. I THINK, from what I have read, the wells currently producing natural gas is not being sold at current prices, but being stored until the price increases? Is that how it works? Can they store the gas and sell when the price rebounds, or do the royalty owners get paid at current market rates at time of production?
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Permalink Reply by Snake Stewart on
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So the gas that is being stored , has already had royalty payments made on it ? They can then wait for the price to go up on there portion ?
I know that there are timber yards that buy (at lower costs I presume) and then spray/hold until they get an order from the paper mill or some other customer.
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Mr. Hugh,
I was referring to people not under a lease at this time. I am sure that if I were under lease I may feel differently about how long I was willing to wait. Being unleased and not being made any attractive offer basically takes that decission out of my hands for now. In the case of the unleased is where these questions originate for the people that I am most concerned about.
Just trying to find the silver lineing for some on the outside looking in. If there is one, (silver lineing ) I believe that time is on the side of those who wait. Whether or not the wait is of their own doing or because they havent been approached with an acceptible offer as of yet.
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I think I understand the question, should a mineral owner wait until the price of natural gas becomes more favorable to lease (and projected to stay favorable). This way they will have a better chance of capitilizing on the high IP rates, at a good price, before the 'decline' of the well.
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Hey KB,
Who is the watchdog in charge of keeping up with these costs and or "expenses" ?
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Leaves a lot of room for indiscretion doesnt it.
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Permalink Reply by intrepid on -
To me, having some government oversight of royalty payments would be much better than landmen licensing for protecting the public.
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Permalink Reply by olddog573 on
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I was in a hotel bar in downtown Shreveport the other night and a consultant for Encana was having a heated conversation with another guy about who's wells were bigger, Encana or the other company which was never named. Encana consultant said they had drilled some that were 20MM cfd which were bigger than anything the other company had publicly released. Another part of the conversation was that Encana was planning on limiting production to 8MM cfd which should allow the wells to producte for 15-20 years instead of going at 20MM for 3 or 5 years.
Personally, I would rather the 8MM because of the things you mention above, economy being the biggest factor. Even with gas prices being down, we still earn a hefty royalty check at 8MM and todays bad economy.
Just my two cents.
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Yea, kinda reminded me of two kids on the playground or two idiots in the gym shower.
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Permalink Reply by The_Baron on -
Snake, Mineral owners do not receive the hedged price. It is my understanding that an operator can only hedge their share of the gas.
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Hum,
Gas is being sold then at two different prices?
If hedge price is below current prices does the operator still have to sell strictly at those lower prices, or seek customers that they arent under contract with ?
Thanks
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