Oil Prices Crash to 6 Year Lows
When oil prices crash to 6 year lows the pain is felt across the entire industry. Ever facet of the industry is affected when oil prices drop over 50% from the previous year. Just 12 months ago we were hovering around $100 oil prices. We have recently retreated to around $40/barrel which represents a 60% drop in prices. As oil prices crash to 6 year lows we are seeing the impact across the board.
Oil Price Crash Affects Mineral Owners
The most immediate impact when oi prices crash to 6 year lows is on the royalty checks mineral owners receive each month. Mineral owners are starting to notice a sharp decline in their royalty income each month. Checks that were once $1,000/month are now just half of that.
For many mineral owners this can represent a significant problem. If you rely on this income each month it can make things difficult. Some mineral owners have decided to sell oil and gas royalties so they have a known amount of cash. When you sell mineral rights it gives you the ability to know exactly how much you have. You aren’t exposed as oil prices crash to 6 year lows because you already have cash in the bank.
Long Term Implications
We’ve been hearing from a number of mineral owners recently. Many are curious to know how long prices will stay low. Unfortunately it looks like prices are going to stay low for a very long time. The reason is that there is a large amount of oil supply in the market. The ability for companies to frack and extract more oil is now creating a bad situation for owners. Fracking gives companies lots of extra oil each time they drill.
The long term outlook due to fracking would indicate that we will have an abundant supply for years to come. For mineral owners this means a reduced amount of royalty income for years to come. It’s impossible to say when things will change but we estimate the impact will last a minimum of 3 to 5 years.
Many mineral owners we have spoken to have decided to sell oil and gas royalties in Texas. Rather than wait for prices to go back up, they woulds rather have a fixed amount today. This prevents them from worrying about further price drops in the market.
Contact Sell Texas Royalties
Whether you need to sell oil and gas royalties in Texas or just have questions, we can help! Simply fill out the form below and let us know how we can serve you.