Have you found yourself wondering why did my royalty check go down? If so, you’re not alone! We’ve been getting a lot of recent questions from mineral owners who wonder why their royalty checks are decreasing value. Unfortunately, you are feeling the affect of the price of oil dropping to record lows under $50/barrel. What happens is that your royalty checks are based on two primary drivers:
1. Oil and Gas Prices
2. Volume of Oil and Gas Produced
When either of these two items changes significantly, it will have a large impact on how much you receive each month in royalties. If your royalty checks are going down, it’s because the operator is now only getting $50/barrel for oil when they were likely getting closer to $90-$100 just a few months ago. It can take a few months for you to start seeing lower royalty checks.
As a royalty owner, your hands are basically tied. There is nothing you can do to change the price of oil and gas other than to wait. While it can be a nice relief as gas at the pump goes down, it can wreak havoc on your personal finances if you are relying on that money each month to survive. What options do you have?
Many royalty owners take a hard look at selling royalties when the price of oil goes down. You can quickly realize that it’s better to get a guaranteed amount now as opposed to unknown amounts in the future. One of the hardest parts about owning royalties is that you never know how much your next check will be. This makes it difficult to plan. In addition, you never know how long the well is going to produce. Especially with lower oil prices, more oil and gas companies will shut in (turn off) wells that are no longer economic to produce. You could see your checks stop coming depending on what the situation is with your particular well.
If you’re considering selling royalties income, we recommend you list them with a reputable service like US Mineral Exchange. Why? Your best bet for getting the highest price is to list where all the buyers are. Thousands of buyers are visiting US Mineral Exchange each month so it’s in your best interests to list in a place where buyers are. It means you’ll get the best possible price.