Hello, if we have been receiving royalty payments for a few years, in about the same amount each month, and then suddenly the payments are 1/3 of what they were, is it proper to contact the lessor/contractor to ask why?Or what is the best way to find out what the activity is? Reeves County, Block 55, section 2. Any insight is greatly appreciated.
Paul
Well volumes normally decline over time. If you have wells with primarily gas, the gas prices plummeted in the early part of the year. Take away issue in the Permian Basin and also supply/demand imbalance.
Mary_Anne if you will check further on the block #…On checking Section 2 Block 55 I see no production in that acreage…in Reeves County there is also Blocks 55 T3, 55 T4S, 55 T5S, 55 T7S, 55 T8S and 55 T10S
CLICK ON MAP TO ENLARGEI would like to thank you for the advice you gave me on mineral transfer and royalty payments. The certified letter forced them to transfer minerals a send division orders. Thank You, Glen Stockton
Hi M_Barnes. May I ask you what you were referring to when you said, “Take away (the) issue in the Permian Basin”? I have seen a big decline in my Eddy County, NM, (permian basis) royalties and was wondering if that particular issue could be the problem. Thanks for your words of wisdom, as always.
Take away is the ability to take the product away from the meter at the wellhead.
Gas has to go through a pipeline-usually a gathering line which goes to a gas processing plant and then a big trunk line that goes to market, such as the GOM LNG plants or to electric facilities. The pipelines in the Permian basin are pretty full right now. So they have to flare the gas or wait.
Oil usually is stored in tank batteries on site and then picked up by trucks.
Gas prices at Henry Hub went down from about $9.00 or so in December to about $2.30 or less in just a few weeks in January. Oil prices also decreased. Combined with natural production volume decline, your royalties probably did go down.
Wells run dry sooner o later.
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