GAS IS GOOD

GAS IS GOOD

Navigating the Current Oil & Gas Market

With the price of oil somewhere between -$35 and $10/bbl., how was LandGate able to close on the sale of four mineral deals last week?  Because Gas is Good. Are you concerned about leasing or selling your minerals in this low oil price environment? If your minerals are located in a gassy basin, LandGate can help.  If you don’t know if your minerals are in a gassy basin, LandGate can help.

 Seeking Alpha reported that over the past 12 months, the price of natural gas has dropped .36%.  But during the same 12 months, the price of oil dropped 54.9%.

Oil and Gas 360 projects that US operators will shut in oil wells producing a total of approximately 300,000 barrels/day beginning in May 2020.

The US Energy Information Administration reported that the US produces 12.7 million barrels of oil per day.

The US Energy Information Administration also reported that 37% of the total natural gas production in the US is categorized as  Associated Natural Gas.

What is Associated Natural Gas?  Generally speaking, there are three types of wells

      • oil wells
      • oil wells that also produce a lot of natural gas (Associated Natural Gas),
      • and natural gas wells.

So, with the price of oil around -$35/bbl., I asked my East TX mineral buyer if he still planned to close on our deal. He said yes. He said they and many others are betting that the price of natural gas will continue to stay high enough to make their wells economic. He said the decrease in the production of associated gas due to shutting in oil wells could end up being GOOD FOR GASSY BASINS

There are plenty of interesting prospects in oil and gas right now. Give us a shout if you’d like to talk about leasing or selling your oil & gas minerals, or if you’re looking for new opportunities in this market.

Dan_McCue

Article by LandGate VP of Land, Dan McCue

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