Several OPEC nations, including cartel kingpin Saudi Arabia, have discussed letting the production cut pact run through 2018. The agreement’s extension could be decided at the OPEC meeting in Vienna on Nov. 30. WTI Crude is down slightly at $50.84 with traders taking the week’s profits (via MarketWatch).
OPEC’s Mohammad Barkindo says there is no doubt the market is re-balancing at an accelerated pace, as evidenced by trading prices sitting near a two-year high. Stability is returning, and there is more light at the end of the tunnel we’ve been traveling down since the market dislocation of 2014 (via Investing.com).
WTI Crude is UP at $52.05 this morning. U.S. oil inventories fell by 7.1 million barrels last week to 461.4 million barrels, the American Petroleum Institute (API) said late on Tuesday. Geopolitically, oil markets are closely following developments in the Middle East, where tensions in northern Iraq could threaten to disrupt oil flows (via Reuters).
Oil prices are UP with WTI Crude at $52.13. The oil market continues to tighten because of OPEC's supply cuts and analysts have revised their oil price forecasts upward. The fighting between Iraqi and Kurdish forces in the city of Kirkuk threaten supplies from northern Iraq while political tensions rise between the United States and Iran, also raising concern over Iranian exports (via Investing.com).
Oil prices continue to look up: WTI Crude is UP at $52.27, and Brent Crude is at $58.30 this morning. The oil market is firmly in the grip of geopolitical risks right now as Iraqi forces have entered the oil city of Kirkuk, taking territory from Kurdish fighters and raising concerns over exports from OPEC’s second-largest producer (via MarketWatch).
Microsoft and Halliburton are teaming up to develop the first global E&P cloud linking the oilfield to the office.
Oil prices rise as the IEA states there is little doubt producers have recommitted to support the market and rebalancing. Also, traders have underestimated geopolitical risk, choosing to focus primarily on oversupply. WTI Crude is UP at $51.61, and Brent is UP at $57.43 (via MarketWatch).
Gasoline inventories, according to the API, saw a decrease of 1.575 million barrels for the week ending October 6, against an expected build of 1.4 million barrels. WTI Crude is at $50.52, and Brent Crude is at $56.27 this morning (via OilPrice.com).
Most investors like the idea of big profits investing in oil and gas, but are averse to the financial risk of dry holes and oppressive operating expenses that eat up profits. If that sounds like you, then owning mineral rights certainly deserves some serious consideration. There are some HUGE profits to be made, but it is not a drilling or development deal, and it can truly be a legacy asset for generations if the owner so desires. (Click here for a Bloomberg article about mineral rights gushing cash).
Mineral rights, also known as mineral interests, are a type of real property rights. Owning mineral rights gives an individual the ability to exploit, mine or produce any or all of the minerals lying below the surface of the property -- in this instance, oil and gas.
Mineral rights ownership is comparatively scarce. The opportunity for private individuals to own mineral rights is available only in the United States and parts of Canada (only 11% of Canadian minerals are privately owned). Governments around the world typically own their country’s minerals. In the U.S., private citizens/mineral owners have the right to buy, develop, lease, bequeath and sell their interests.
Mineral owners may realize substantial monetary gains from producing properties in two separate and different ways. The first comes in the form of lease bonuses. A lease bonus is an upfront cash bonus paid by an operator to the mineral owner for the right to develop the acreage. The second revenue source, which is royalty payments, resulting from the development by an operator of producing wells on the leasehold. Combined, lease bonuses and royalty payments can create substantial revenue from the production of oil and gas. In addition, the revenue from production is paid to mineral owners before any expenses are deducted. Perhaps most importantly, mineral rights never expire.
Mineral interest purchase, ownership, management, and disposition are parts of a real estate transaction.
Mineral rights ownership, as it relates to oil and gas, began to take shape and gain financial importance in 1859 with the drilling of the first commercial oil well in the U.S. by Colonel Edwin Drake. Mineral rights can be severed, or separated from, the surface rights to the land. A surface rights owner has air rights over the land and from the surface down to “plow-depth.” Below that, the mineral owner’s rights take over.
Public and private oil companies are always in search of -- and pay substantial bonus premiums for -- lands to lease that may provide oil and gas production once developed. Competition is fierce for the minerals underlying good producing properties, or those which are “ahead of the drill bit.”
As I have mentioned, lease bonuses are upfront lump sum cash payments per acre to the mineral owner for the right to drill for oil and gas, PLUS there are royalty checks from producing properties. In addition to the lucrative lease bonuses, owners can get from 12.5 to 25 percent of gross revenues generated from production. On top of that, mineral owners incur no expenses for any drilling, completion, operations or dry-hole costs as one would on a drilling and development investment, making for a compelling investment opportunity.
An article in the Wall Street Journal, “Mineral Rights Can Make You Rich” touted a 2013 study supporting that private mineral rights owners in 2012 earned $22 billion dollars in royalties.
Often more familiar to, and more often owned by institutional investors, mineral rights should also be an investment consideration for qualified private individuals given low risk and high potential reward with proper execution.
At Redhawk Investment Group, we have decades of experience developing and managing oil and gas investments. This fall, we’re offering accredited investors the opportunity to invest in our Redhawk Minerals Fund II, LP. This fund, with mineral rights strategically located in Oklahoma’s high-producing STACK play, is projected to be a $30 million dollar fund with an average annual target yield of 20 percent plus.
Curious to learn more about mineral rights and how you could make money from ownership?
Get in touch with us.
OPEC has adhered to its record high supply cutting deal so far this year and is considering extending the deal beyond its March 2018 expiry. The market appears to be re-balancing quickly, helped by the cutback as well as by stronger-than-expected growth in global demand. WTI Crude is UP at $51.03 and Brent Crude is at $56.61 (via BOE Report).