Hello. It's been a while since I've been on here but I have a question for everyone I'm really curious about. Has anyone else noticed a sudden increase in plummeting royalty payments and market prices? I'm obviously not oblivious to the fact that the market has been steadily dropping for a variety of reasons and a lot of gas companies are dialing back production due to falling prices BUT the most recent market price seems to be twice the drop - at least in my area. We are with EQT; former Rice Energy landowners, and bought stock and fought to vote the Rice team back into management positions at EQT after abysmal performance and poor relations over the course of EQT ownership of former Rice leaseholds. We had - and still have - confidence in the Rice contingent to turn things around for EQT but are currently questioning if it will be advantageous for their existing landowners and producing units. This months' ridiculously low sales accompanied by apparent lack of interest in advancing existing producing units have brought questions to mind. We attended the EQT Land Owner meetings with Toby Rice and a lot of emphasis was placed on returning to existing pads and drilling additional laterals, thereby saving prep costs, increasing production, and lowering drilling costs. They cannot - of course - affect falling market prices, however we haven't seen any attention being paid to existing units, which seem to be being let to slowly (and lately NOT so slowly) fizzle out. Wondering if this is something others are noticing. It would seem to me - logically - that the most financially profitable would be to get the most out of existing units, thereby reducing drilling costs, during this slump in market prices, rather than going to the expense of developing new units and starting from scratch. Just not understanding what is currently happening and wondering if anyone out there has any insight or ideas. Our unit is only 3 yrs old and has had an accumulative 30% drop in royalties over the past 12 mos and a full 30% drop between just last month and this month, which was a complete shock. Curious what others are thinking, though I'm sure it's nothing good.
Ours was about a dollar a unit less 1.39\2.30 but more production so we actually go more money. Since the spot market has been above 2.00 to 2.30range, I was really surprised.
I am still trying to get my monies from 2016 (fall) that has been in limbo. They keep saying that there was a problem when they merged and are working to correct it. I bet if they overpaid me it would not take 3 plus years to fix.
Lori, we totally agree with your entire post. We were thrilled when the Rices took control of EQT. I do worry if they can survive the ridiculous price of $1.43 we were paid this month! Gas has been good to us, and we are thankful, but I am fearful of the future. I might be naive, but I think we have our best shot with the Rices. I truly think they have had a vision for this industry in Appalachia, I hope they can make it work. All the best for all of us!
Hi Lynn. I think most of the land owners were in agreement that our best hope in regards to the survival of EQT were to get the Rice contingent back in the driver's seat. My fear is that their focus is going to be forward facing rather than expanding what they already started, leaving existing land/royalty owners to stagnate. Our unit has seen no expansion or improvements since going online in 2015/2016 and as I mentioned, we have seen a clear 30% drop over just 3 yrs and another full 30% in just 1 month. I realize that the gas companies and Rice team have no control over falling natural gas prices but expanding existing units just seems to be the most logical, economically sound, inexpensive means of bringing additional funds to the company, landowners, and shareholders, rather than developing new units that require much higher cost. Our gas sold at just $1.34 and although production was only down about 10% from the previous month, the market clearly calls for cheaper expansion to bring in the most cost effective funds/profits. That's what worries me, both for existing land/royalty owners and the company, itself. I've seen units smaller than ours with as many as 24 laterals; new ones added every few mos. Not sure if they are EQT or Range Resources or another drilling company but whoever, they are obviously staying above the curve by producing more for less while the market is low. The theory that it's smarter to leave the gas in the ground while prices are low just doesn't make sense if it puts the company and the royalty owners out of business with little or no sales coming in. I agree with your assessment, that the Rice's have had a vision but hope that they are accounting for the assets they already have rather than looking ahead to new during this downturn. We bought stock and voted for them to take over. Hoping they can turn things around for all of us, as well!
One MAJOR concern we have, our royalties have been SO diluted. Our wells have been thrown in with so much undrilled acreage. If the day comes that they drill that, we will share in that. In theory that would be great. In the meantime, so many people are getting a piece of this, royalties are very low. In this climate of too much gas, I fear the drilling will not proceed as planned. Thus we will never recoup our shared royalties.
Thank you for sharing your experience. I'm less than a year into receiving royalties and things are chugging along just fine from the wells I am a part of in Marshall County. Based on available data I can access and understand (as an absolute amateur/average person) on WV's oil and gas database, it appears that most nearby wells fall off in production after one year (if not before) and the decline is steady thereafter. There are simply too many variables at play to make apples to apples comparisons but, in my very limited understanding, your rate of declining royalties appear to be very common and should be expected.
I don't know how long my boon will last but I expect to receive about 90% LESS than I am now in three years, if I'll receive anything at all.
For my part, I don't want the fun times to end but I know I can't count on royalty checks for income even though it's been a great help so far.
I get most of royalties from NGLs and not from straight up natural gas, if that matters.
Lorie I believe many of us are very glad to be able to receive even a small pittance from the sale of gas or oil under our respective properties.
Some farms have been in the same families for close to two hundred years. Their families have worked and worried that the hopes and dreams will carry on for generations yet to come. But there are, of course, some folks that did not have the luck to be leased and receive a few dollars that allowed their family to hang on to those dreams. And there are some other folks that went way overboard hoping to advance and improve their situations. But instead a poor choice, (Borrowing against the expected royalty payments), found themselves worse off then before..
Great hearing your input and commentary
We are beyond a doubt grateful for the discovery and technology enabling the natural gas under our land to be harvested from our farm, which has also been in my husband's family for almost 200 yrs. My son and family lives in the original farmhouse built in 1842, next door. Many years have gone by when we didn't know if we'd be able to hang on to the farm but we persevered and were blessed with the royalties enabling us to guarantee our family farm will be here for the generations to come, in whatever form they choose; at least the next two. Our small (100 acres) family farm has never been able to support itself and we have kept and maintained it more out of love and honor to the land (and pure determination to not be the generation to lose it). We will be buried in the family cemetery, as will our next generation and other family members. The Marcellus gas play breathed new life into family farms that were doomed and we cannot feel anything but blessed that it came when it did. That said, knowing that we have a valuable commodity under our land and that it has the capability of keeping the farm going and land in the family as it has been for many generations, grateful or not, we cannot avoid being wary of unfair or unscrupulous corporations and operators who may or may not be cheating the landowner out of what is their fair royalty for providing the resource that is allowing the drilling companies to be in business and make the profits they have and do. Families have worked hard and hung on to family farms through the worst of times and it is only right for them to be treated fairly in this endeavor. I feel for those who placed TOO much on unsure royalty futures by borrowing against them or spending what wasn't guaranteed and I'm sure many are already feeling the massive decrease in gas prices as much as the dairy farmer feels the drop in milk prices and the cattle raiser the drop in beef. The natural gas has very much become a cash crop for many farms that couldn't self-sustain in today's agriculture markets, taken over by large commercial operations. My perspective is to look in to the business side of natural gas leases, royalties and business in general, particularly during this unprecedented drop in sales prices and royalties, to bring as many landowners together and questioning what's going on rather than sitting back and just accepting that it is what it is because - it may not be. One thing for sure - we landowners are blessed to have this resource available to market at a time when many faced losing their operations but lack of attention to what is going on and not being proactive with respective companies is not in our best interests. Just asking questions is more important than simply accepting all that we are told or not told. You certainly would question your employer if you suddenly started getting lower paychecks with no explanation, or if you sold a crop and the buyer cut the payment without a reason. It's the same situation. I also don't think just bailing and selling out is the answer either. This is just a discussion among other landowners facing the same issues. It is where answers begin. Blessings to all for a more profitable and happy New Year in 2020!
I believe you've clearly expressed why you are frustrated and it seems like a very reasonable and well informed position, based on what you know. I often wonder how much information is unknown or intentionally masked from the royalty owners. I suspect it's quite a bit. I could be wrong, but I believe there is no external authority to check the accuracy of well production data in Marshall County, it's all self-reported by the drilling companies. Why that's even allowed may say a lot. I would imagine it's the same in your area.
There is a glut of gas in the local market and there is a mass exodus by many companies from natural gas drilling. Some savvy companies are doing ok but it all may go up in smoke sooner than later. Why does a certain company not take certain actions that would seem to clearly benefit their position and improve the income of royalty owners? It's just too hard to get a good read on the overall picture and all the small details using an average person's resources, in my opinion. Drilling companies have their agenda and that doesn't necessarily benefit anyone else.
Good analogy and I agree. No matter how good a co may be, they will always look to their own bottom line first.
Did you sign a lease with a post production cost?