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Home Blog How Oil Prices Affect Mineral Rights Value

How Oil Prices Affect Mineral Rights Value

 

The discovery of valuable oil and gas reserves has historically been a celebratory occasion for property owners. Mineral rights are leased, generating consistent financial payouts used to clear debts, support loved ones, and pursue new interests. When external factors cause crude oil prices to crash, investment returns are greatly diminished or completely wiped out. 

 

An ever-changing business with global players, oil and gas production is cyclical. Understanding what to do with your mineral rights is a challenge. That’s where Momentum Minerals can help. 

 

As a top mineral and royalty acquisition company, we understand the dynamics of the oil and gas industry. Here are the options available to mineral rights holders, and how to get the most value for your assets. 

 

Understanding Mineral Rights 

While many countries allow individuals to purchase land, ownership rights only extend to the surface. In the United States, landowners can develop and exploit natural resources found beneath the surface. Ownership of underground assets is called mineral rights or mineral estates. 

 

The term mineral rights generally indicates the authority to explore, develop, extract, and market subsurface minerals. Examples include crude oil, natural gas, coal, precious metals, non-precious or semi-precious metals, specialty or rare earth elements, and other solid materials like clay, gravel, sand, and stone.

 

When the property you own contains valuable metals, minerals, or rare elements, it’s potentially far more valuable than just land to enjoy. It can become a revenue stream that leads to the following: 

 

-Financial security

-Estate planning

-Eliminates uncertainty

-Peace of mind

 

There are two paths landowners take to maximize the worth of their property’s mineral rights: leasing and selling. 

 

When leasing, a company rents the land for a set time to potentially extract minerals. If minerals are unearthed, the landlord receives a monthly royalty payment for an agreed-upon period. Fluctuating market conditions can impact the value of those payments.

 

Selling mineral rights is an easy, stress-free solution. The landowner collects a sizeable lump-sum payment and doesn’t have to worry about receiving accurate royalty fees from the lessee. They are also protected against changing commodity prices.

 

Oil and Gas Price Impact on Mineral Rights 

Product utilization is pivotal to the value of commodities. For oil and gas, that means the consumption of crude oil and natural gas for transportation, manufacturing, electricity, and heating fuels, to name a few. 

 

Crude oil prices fall when production outpaces demand. A variety of factors cause its value to swing wildly. 

 

-Supply-and-demand changes

-Political instability

-Global conflict 

-Pandemics

-Emerging technologies 

-Alternative energy sources

 

When crude oil stockpiles grow to record highs or usage plummets, the benefits of leasing mineral rights are diminished. Here’s how low-priced crude oil hurts lessors: 

 

-Severe mineral rights value degradation

-Lower or zero royalty payments

-Bleak financial outlook

 

The best way for property owners to get the most for their mineral rights is to partner with the trustworthy, client-friendly minerals acquisition specialists at Momentum Minerals. We buy mineral rights at competitive prices, taking care of all the details for the mineral rights owner.  

 

Here to help

Momentum Minerals is a mineral and royalty acquisition company headquartered in Houston, Texas. By combining decades of mineral rights assessing experience with a customer-first mindset, we have the expertise necessary to evaluate mineral assets accurately.

 

Our three-step process is simple and hassle-free. Rest assured knowing you’ll receive the best offer and exceptional service. Here’s how it works: 

 

1) Information gathering 

Our team engages you in exploratory discussions, such as requesting information about your royalties and minerals. This typically includes recent check stubs, copies of leases, assignments or conveyances, and maps, if applicable. A significant portion of our initial mineral rights analysis is performed with your check stubs alone. This enables us to understand what you own, where it’s located, and who’s paying you.

 

2) Evaluation and Appraisal

Once we’ve received the necessary data, the Momentum Minerals evaluation team takes over. Our landmen, engineers, and financial analysts review the asset’s value and make on offer. Outside technical experts occasionally support the evaluation and appraisal process, ensuring you get the highest investment return. Our associates are some of the industry’s most qualified engineers, who also consult for major operators. This partnership gives us intimate knowledge of most, if not all, plays.

 

3) Present offer 

After technical data compilation, preparation, and research is complete, the Momentum Minerals executive committee reviews the final study and extends an offer. Purchase and sale agreements are drawn up after reaching an agreed-upon price, and a closing date is scheduled.

 

Where we Buy Mineral Rights

Supported by one of the largest alternative investment managers serving many of the world’s most prominent institutional investors, our company offers competitive outlays for assets and quickly close transactions of any size. Areas we serve include: 

 

-Texas

-Oklahoma

-North Dakota

-Louisiana

-Wyoming

-Colorado

-New Mexico

-Pennsylvania 

-Ohio

-West Virginia

 

Optimize your mineral rights with Momentum Minerals. We help you find value in an ever-changing oil and gas industry landscape. 

 

Contact us for more information

 

Have a Question?

Send us a message and our team of mineral acquisition experts will get back to you shortly.

713-633-4900
750 Town & Country Blvd,
Suite 420
Houston, TX 77024

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713-633-4900
750 Town & Country Blvd,
Suite 420
Houston, TX 77024