Why sell your oil and gas rights when oil and gas prices are low?
Posted by admin at September 2nd, 2015
Selling all or part of your mineral interest when mineral prices are at their peak can be very difficult and identifying the right buyer even more difficult. Many times the mineral owner simply doesn’t have the opportunity to sell at the ideal time and must wait out the market. Oil and gas are commodities and subject to extreme fluctuation in prices. A substantial drop in oil or gas prices has a direct impact on an exploration company’s bottom line causing drilling plans to be delayed or even abandoned all together in areas where the economics are considered to be less than optimal. This is when a mineral owner interested in selling all or part of their oil and gas rights needs to study the prospects for those prices to increase again and make their decision to sell and when to sell accordingly.
Most experts agree that the recent drop in oil prices will not be short lived. There are lots of reasons why oil prices have dropped like they have but the primary factor is that worldwide production is now exceeding demand by over 2,000,000 barrels of oil per day and, like any commodity, this glut driving is the price down. And, even with low oil prices, production is not expected to slow anytime soon with no large surges in demand on the horizon. Energy efficiency and the increase in renewable energy such as wind, solar and battery power is definitely having an impact on the demand for fossil fuels
So should you sell your mineral rights when oil and gas prices are low? Well it all depends upon your situation and how important a lump sum payment could be to you and your family. You might have been able to sell your rights at an earlier time at a much higher price, but if there are simply too many questions about the future value of this highly volatile asset it might be time to consider selling and investing that money in safer investments you can control.
Apache Land and Royalty would welcome the opportunity to discuss current market trends and future demand for oil and gas with you so please give us a call at 888.428.4811.