Going through the process of transferring ownership of mineral rights into my name after the passing of a parent. Just curious if there are indicators on if one year or one month will be better with royalties and such. I know virtually nothing about oil and gas and such so I’m just curious.
I was looking at past statement and 2022 seemed to have been great with over 100k in total royalties and then 2023 dropped down to around 40k. Obviously I know they can fluctuate like crazy over the years as these have gone from my grandparent to my parent and now to me.
I’m just wondering what I should know about these things I’m inheriting.
Producing minerals are a depleting asset. Couple that with natural gas prices going from $9 to $2.5 will reduce revenue significantly. Welcome to the roller coaster.
Your royalties depend upon the volume of product sold, the price of the product (oil, natural gas, natural gas liquids), your royalty amount, takeaway capacity and to some extent geopolitics. Natural gas prices were very high in 2022 due to the US supplying LNG to Europe during the Ukraine war right before winter hit. A mild winter at the end and an oversupply of gas caused prices to drop early in 2023. Tensions with the middle east and OPEC, demand in India and China, changing demand for alternate energy, etc. are all factors.
In general a well will decline in volume over time which is perfectly normal. The prices vary from day to day so can go down or up. If more wells are drilled as infills, then you may get a boost in production.