Got Royalties? Here’s Your Market Snapshot
The final Crude Oil and Natural Gas Prices are in for April 2009 and continue to look pretty scary! The effects of the world wide recession (some still use the “D” word) on energy consumption coupled with excess supplies, especially of natural gas here in the United States, continue to drive down current and futures prices.
Here’s a rundown: NYMEX Crude Oil finished at $50.00/Bbl. with June 2009 Futures trading at $51.57/Bbl. The final week of April DOE report on crude oil inventories was also bearish, as inventories increased by over 4 MMB. Crude Oil demand continues to languish at or near the trailing five year average and the Fed’s recent comments that the current depressed economic environment will take longer than originally anticipated to turn around, hasn’t helped prices.
NYMEX Natural Gas finished at $3.39/MMBTU with June 2009 Futures trading at $3.35/MMBTU. The EIA Weekly U.S. Storage report indicates that U.S. storage is currently 23% above the five year trailing average. Demand continues to be muted by the economic slowdown, particularly in the industrial sector which accounts for 29% of total demand, and the EIA currently forecasts that demand may fall an additional 7.4% this year! With such a grim demand forecast and higher than historical average gas storage volumes, the natural gas pricing forecast remains extremely bearish.
So what does all this mean? Given this pricing environment, producers, especially natural gas producers, are cutting their capital expenditure budgets, postponing non-essential projects and in general, conserving cash. The long-term effect of this should be lower supply in the fourth quarter 2009 and beyond depending upon the speed of the economic recovery. For royalty owners, this price forecast is also important. The Checks that will be received in 2009 will undoubtedly pale in comparison to 2008 checks received during the historical high prices. With crude oil and natural gas futures also continuing to trade down, in subsequent years, checks will also be lower. This is probably not what royalty owners want to hear (any more than the producers), but that’s the reality and it’s what we need to budget for in the near term. And this is precisely where we can help.
Russell T. Rudy Energy, LLC is a privately owned oil and gas producer, specializing in the acquisition of mineral, royalty and overriding royalty interests from individuals, Estates and Trusts. We have experience in the acquisition of nearly any type of oil and gas interests, ownership situation and/or record title problem; we don’t charge for our time and will spend the time necessary to understand each particular situation and need in order to make you a fair offer. We are always glad to visit with potential sellers, even if our recommendation is that selling might not the preferred option. We may be contacted toll-free at 1.800.880.0940 or through our website oilandgasminerals.com.