I have been reviewing the actual oil price received on my Reeves County acreage and am not happy. At the first of the year it was running around $4 less than the WTI average price. For September our production is receiving $51+, around $19 under the WTI price!!!
Heck, in April/ May we were getting around $62/barrel. The price of oil has moved up into the $71 range and we are getting $51.
Miserable trend!
It is. Some people will also start seeing $1.25/mcf for gas.
Is this due to long term purchasing contracts?
Be glad you’re getting above $50/bbl. The lack of take away transportation for both oil and gas is cutting into what they can pay per barrel or mcf. You think pipelines are cheap? Every land owner with a right of way has his/her hand stuck out for all they can get. The steel manufacturers and pipe suppliers using that steel are way behind on their delivery quotas, driving the price of pipe up. The welders and ditching/pipeliners are getting $100/hour and more…so the labor cost
of laying lines is climbing steadily. Then the counties won’t keep up the
road surfaces for access to the locations and pipeline rights of way…not enough money the counties say…So, the trucks and equipment get banged around and damaged getting to and from location before any work is actually done. And, remember the Production company is putting in all this infrastructure on the PROMISE of getting paid for that same
oil and gas you are. I think they do a pretty good job of passing the
income on to you. It could be worse…you could be in a real communist/socialist country where the State owns and takes everything.
The USA is STILL the best place in the world to live!
in Verhaen, Reeves county, Tx 
Right on Mr Lawrence. Pipe and equipment and labor to put them in the ground to satisfy the company , state and county ,and EPA is not cheap. If I were not so old I would come out of retirement.Never made that kind of money . By the way , is the rig still on Denton # 68 107 ? Thanks for all your time on the forum . I think everyone will agree. CharlesJ
Charles and Pat J…
Yep, the rig is still there on the Denton #68-107. They are close to TD and graduated fracking. The lateral runs due North under the corner of your land at about 11,500 feet deep. Did you ever get any notification of being included in a pooling agreement? I dunno if that Primexx well is part of any pooling agreement. Maybe Clint would know.
,Reeves county, Tx
Yes, Lawrence and Charles, they have enlarged the footprint. Is that a good thing? I’m thinking it is. And also, what is TD? I have so much to learn!! Thank you.
TD=total depth…for laterals it really ought to be TL=total length from surface.
, Reeves county, Tx
Thanks Lawrence, makes perfect sense.
Received 49.83 per barrel oil for August production.
OMG!!! What operator?
BHP Billiton I hate to say for the State annex well.
You mean BHP received $49.83/bbl. Even if you own half the minerals
you’d only get about $10/bbl after everyone else got their royalties, including the state. That $49.83 is discounted for the transportation cost
of the oil via pipeline, rail, or truck which they have to take out BEFORE
the state and any other royalty owners get their cut.
You act like you think they should have paid you $70/bbl…but ‘they’ don’t
owe you that much. The operator has production costs and stockholders
they have to pay a dividend to…so the royalty owners are starting out behind the eight ball on a steep hill down for production revenues.
And…with the unrest developing worldwide over oil and gas pricing…you can count on your take per barrel going DOWN some more.
Like it or lump it…that’s the way it is. Just keep supporting the exploration companies in finding and producing new fields…and it’ll all
come out in the wash to your and other royalty owners favor.
JMHO
, Reeves county, TX
Why is it ONLY Reeves County? My New Mexico royalties have been in the mid 50.00 per barrel price range, so what’s so different about Reeves? Other Texas counties, Martin, Scurry, Hardeman, Hockly, Gaines and on and on etc have also been in the mid 50s per barrel price range for August production as well.
Not that I’m not grateful. I want what the other oil producers are paying me, Devon, Mewbourne, Cimarex, Apache, XTO, and on and on.
Sounds to me this “per barrel oil pricing” in Reeves County is going to end up being one messy class action lawsuit one day, a decade from now.
Per Barrel pricing will vary operator to operator, area to area, based on the hedges they have in place and the transportation costs for that area (infrastructure and contract dependent) Two sections right next to each other could have VERY different price realities if one operator locked in hedges at 75$ and the other locked in a lower rate or went naked as the price fell…
Also quality and energy content of the crude will impact your $/bbl. For instance if you are in a very sour field with high h2s, the realized price can be substantially lower than the benchmark prices.
MD = Measured Depth, this is the length of the actual wellbore, if it goes a mile down and a mile out laterally MD will read 2 miles. Once the well is at its final “TOTAL DEPTH” it has reached TD and MD = TD
TVD = True Vertical Depth, this will read how deep the well is from surface, not how long the wellbore is, if it goes down 1 mile and out lateral one mile TVD will be 1 mile.
(Note, there can be some confusion because drilling permits on the RRC essentially label TD as TVD, but if you are getting drilling reports it will be used as I’ve explained)
I have to agree with KatKon on this. The $49.83 is most likely a hedge that BHP put in place thinking oil would fall instead of rise. In addition, stockholder dividends are not paid out of royalty owners interest they are paid based on profits made from the Operators WI.
Lawrence, Could you expand on why you stated even if you own 1/2 the minerals you’d only be getting paid $10 per barrel? My initial thought on that statement is I couldn’t disagree more.
Also, there are certain clauses and types of language you can implement within your lease form such as a free royalty clause along with other “point of sale” language that allows you to completely prevent these issues from taking place.
I always enjoy reading your posts and appreciate the time you take to share your thoughts with everyone.
Kind Regards, RW
Rick5…New Mexico doesn’t have a Texas Railroad Commission regulating them and they don’t have a Texas State Permanent Endowment Fund for the University of Texas system with first DIBBS on all the production royalties in the state. With oil at $65/bbl, I’m frankly surprised the operators are getting $50/bbl and pay you as well as they do.
JMHO…, Reeves county, Tx
New Mexico does have the equivalent of a PUF, but the money can only be used on buildings. Money for salaries and operations has to come from Santa Fe. Go look at New Mexico Military Institute as an example.