Royalty checks down

Texas Mineral Rights Reeves County, TX
1

I have mineral rights in Reeves Co with producing wells ( leased by OXY)and used to get really nice checks…then Covid hit. It’s never really recovered and I’m perplexed as to why. Oil prices are back up, but my checks sure aren’t. Anyone have insight that would help me to understand?

2

Likely one of two scenarios:

  1. After being shut-in, when the wells were turned back on they don’t produce like before. This is a risk of shutting-in a well, no one cannot predict the well’s performance once the well is turned back on (pressure’s within the reservoir are impacted by a well being shut-in/closed).

  2. Not all the wells are not actually turned back online. Are you getting paid on the same number of wells as before?

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Option #3. Wells have a natural decline, so although prices are up, you have less product to sell, so that can also contribute to smaller checks.

Option #4 goes with #2. Sometimes wells produce better for a short while after being shut in if the pressure has built up a bit, sometimes they do not if the well bore gets a bit damaged by the shut in. Sometimes. the operators will turn the wells back on slowly in order not to damage the wells, so the volumes may not be as high as they were before.

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4

Some months, yes. Som months, no. I don’t get it…

5

Gas is sent through the pipeline and oil is picked up by a pumper, so depending upon what day the pumper picks up, you may have slightly varying amounts month to month. The well produces a certain amount that is metered and goes into the tanks or the pipeline, but you are only paid on what gets to market in that month, hence the pickup amount is what affects you.

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Thank you so much for your insight. I appreciate it!

7

It really depends on the well My wells in Section 13 Blu 271 has skyrocketed So if your well is a really good one with lots of production, that’s a better indicator than fuel prices. The COVID pandemic didn’t effect much of my royalties. They just slowed down a little for 6 months

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