Despite claims to landowners that the market downturn is making things tough for the oil and gas industry, representatives of the West Virginia oil and gas industry still forecast a strong future.
The United States Energy Administration expects that residential and commercial demand for natural gas will increase through 2021 and remain steady in 2022. Recent counts have increased the number of active oil and gas drilling rigs in West Virginia from eight to 12 as production and operational efforts increase.
We have all seen the uptick at gasoline pumps when we fill our vehicles. Oil and gas prices, as well, are trending upwards. Landowners should start to see this reflected on their royalty statements moving forward. That should mean more money in the pockets of royalty owners.
With this uptick in coming production and prices, royalty owners can expect a new push by brokers and others to attempt to buy royalty rights out from under royalty owners. We are already seeing an increase in calls from potential clients seeking guidance about the sale of their mineral rights.
As we have cautioned before, the majority of these entities are not end-run buyers, but rather flippers trying to make a quick buck by selling your rights to other entities. Most of the companies that will cold call landowners or send advertising mailers are quite predatory. These companies use their knowledge and connections in the industry to get ahead of market conditions. After long periods of low prices and lower royalty payments, these companies will jump on the opportunity to offer landowners lump sum payments for their royalty rights.
Landowners who might not have planned as well financially or who might have grown accustomed to their prior increased royalty payments are particularly susceptible to these types of companies. Selling royalty rights is a perfectly acceptable financial plan for many people, but only as long as you understand the market and look for the most competitive prices and the most reputable buyers. That type of information is sometimes not readily available.
There are, however, entities that look out for landowner interests. Bordas & Bordas and Bordas Mineral Management are two companies that can help. If you have been approached about selling your mineral interest you should give us a call to determine if the offers that are being made are the best offers possible.