Oil producers balances budgets based on prices
Wednesday, July 5, 2017
Last Tuesday, oil prices closed at $44.24 per barrel — a stark difference from the $53 per barrel highs in April. Should pricing remain below $45 a barrel for several months, U.S. shale oil producers are expected to revisit spending, according to Reuters.
For shale producers that created their capital budgets when oil was selling for over $50 a barrel, the recent drop has threatened ambitious companies, who wish to generate enough cash flow to justify higher capital spending. Many producers are still not earning enough to cover their larger 2017 budgets and the latest decline hasn’t helped.
Although many producers are leery of the future or the market, they plan to keep drilling new wells for the time being.
Learn more: Reuters > Shale producers say spending ‘flexibility’ key as oil prices drop
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Shale FAQ
How often do royalty payments come?
Depending on the company, royalty payments can arrive monthly or quarterly.
Are my royalty payments transferable?
Yes. If you plan on selling your property, notify the gas company that is leasing your land and your realtor. They will make arrangements to allow the royalty payments to transfer to a different land owner.
What are royalties?
Royalties are payments from the gas company to the landowner as part of a lease agreement. Royalties payments cannot begin until production begins. The payments are dependent upon the market price of the resource.