My family has mineral interest in a number of wells that were originally drilled by Felix and part of the purchase by WPX. Felix had price collars on 70% of their wells at $53-$63, and these were conveyed to WPX in their pre and post sale literature. WPX’s current financials still express current collars of the same on about 18% of their oil, and fixed price swaps on about 82% of their oil at $39.81. It is certainly possible that we are interpreting their website literature incorrectly. We have 12 new Wells in Winkler County that began producing at the first of the year. The Feb. price paid was $59.04, March $51.56, April $31.12, and last month at $17.48. Are collars and swaps well specific, averaged for all produced oil, or interpreted by the company as they deem fit. Is there a way to verify the correct price payment on the individual well.
1 Like
Any hedges the Operator may have in place will only be for their share of the oil. Your royalty oil will not be a part of their hedges. Hedges are financial derivative transactions and are not tied to any specific wells. The physical oil will still be sold for the going price in the region and you will be paid that price.
Look at it this way: What if the price of oil suddenly shot up to $100/bbl? Would you accept only being paid based on their hedged price? Probably not. No Operator would ever subject themselves to that kind of liability.
2 Likes
Thank you Steve. That makes perfect sense and clarifies the issue for us.
This topic was automatically closed after 90 days. New replies are no longer allowed.