Late Summer Market Swoon, But Not In The Commodity You Think

Crude oil has taken a major tumble recently from recent highs in the mid $70 range. Oil-rich royalty checks have already been impacted by the discount to WTI in most producing regions. Now with the WTI price decrease, the further value of royalty payments will see a reduction of 30-40 % over the coming months. Fortunately, in natural gas, prices have remained steady late in the injection cycle, across various basins. This translates into stable check values for the balance of the year, as opposed to the previous two years with late summer and early fall prices falling significantly. The advent of new pipeline take away especially in the Northeast Basins and NGL demand have helped stabilize prices this season. This stability is in question for next summer as production increases and may see the supply side weigh on pricing as it has in the past. For now, we look to early winter to see if the weather can move natural gas prices higher to give royalty owners a great opportunity to initiate an Advanced Royalty Program to capture the better value and will be watching for oil to stabilize and hopefully move higher. Stay tuned for more posts surrounding oil royalties.