A New Year, Same Old Story?
It’s January 2020 and it’s no secret that the Oil and Gas Market is in another recession. Multiple companies including EQT, Chevron, and Antero have all made public announcements declaring plans to either leave the Appalachian region completely or sell off a bulk of their assets for capital. Needless to say, there is some “panic at the disco” happening in the Ohio Valley, but is it time for you to panic? I’m not so sure that it is… In case you missed Oil and Gas Attorney Christian Turak’s blog last week, click 2020 Oil and Gas Preview, for a more detailed outlook on 2020 and beyond.
We’ve Been Through This Before
If you’ve kept up with industry news, it appears, at least in the Appalachian Basin, that it’s all doom and gloom. That the industry is folding. The production is drying up, and the operating companies that are here are selling off assets faster than I was selling off Blockbuster stock in the early 2000s after being able to rent a movie from a machine for $1 (Thanks Redbox, we had some good times. Now we can do everything right from our TV’s without even leaving the house. Technology is great isn’t it?). So if everyone is quitting and essentially taking their ball and going home, is it time for you to follow suit?
We’ve been through this before. We’ve seen downturns in the oil and gas market, we’ve seen companies like Chesapeake sell off all their assets in our area and leave town, and we’ve seen lease prices go through ebbs and flows. It’s always about timing. Are you signing a contract at the right time and under the right circumstances? Unfortunately, many people learned that tough lesson in 2005/2006 when many leases were being signed at $5/acre. We didn’t really know what was to come then, but we found out pretty quickly that was the wrong time to sign. Now, thankfully, we’re armed with much more information. We are armed with experiences and knowledge that help us navigate through the tough times. 2020 is not going to be easy so I don’t want to pretend that it is. 2020 is setting up to be the most challenging year we’ve seen in Oil and Gas, and most certainly the most challenging year I’ve seen over my 8 years here at GKT.
But I have news for you: If you own mineral rights, your phone is likely to start ringing off the hook. Also, you better check your mailbox every day because it too is about to overflow with mail from the industry, but specifically, a certain section of the industry.
Be Prepared, Oil and Gas Companies Will Be Calling
I had a phone call with a client today who told me he has received 8 phone calls in the past two weeks from companies looking to purchase his mineral rights. He said he’s received numerous letters in the mail during that time frame also. Makes sense, right? Mineral buyers know you’ve likely heard or been subjected to the doom and gloom story. They’ve been preparing for this launch for many moons. They know you’re worried and they can help; or at least, that’s what they will tell you.
You see…the story is very easy to spin. They can tell you the same things that we have shared with you previously: the market is bad, you may not be able to lease your minerals, or in the event you can, the money will not be very good, that the royalty checks you may have been receiving are suddenly going to stop because your wells are likely to be shut in, and the beat goes on and on. The idea really is to stir up the panic you may have already been feeling. The mineral buyers are the ones driving the Brinks trucks in 2020, they are the ones walking around with the big bags of cash just ready to plop one down on your doorstep, so be prepared to hear from them, because much like the Boogeyman or Santa Claus, they know where you live.
Is The Time Right For You to Sell Your Minerals?
I want to make sure I express this. If Planet Fitness can create a “judgment-free zone”, so can I. Understand that circumstances always dictate outcomes. There are plenty of reasons why people sell their mineral rights, and some of those reasons are very understandable. All I’m saying to you is to take a breather. The calls and emails you get from these companies can be overwhelming at times and the agents or brokers you speak to on the phone can tell you a story better than Dr. Seuss told us when we were kids. Have a plan if you choose to sell your mineral rights this year.
Know what you need to do with the money, because as I share with all of my clients, once you sell, you’ve sold, that’s it, there’s no more money in the future. The deal is forever.
Make a list of things you may need the money for now or what you could do with now and compare it to the long term benefits of holding on to your assets. Not all of you have children or grandchildren to leave your mineral rights to. Some of you haven’t been afforded an opportunity to see the ocean in 25 years. Some of you have medical concerns or kids going to college and need the money. Whatever the reason, trust me, I get it and I’m certainly not judging. We’ve all heard the term “buy low and sell high” and right now that’s what is happening.
Trust me, the buyers will seek to take advantage of you in a vulnerable state.
Like I said, we’ve been here before. The important thing now is to not make the same mistakes we may have made 10 years ago.
Have Oil & Gas Questions? We Can Help
If you have questions, if you want to talk through anything at all, or if you need any assistance in selling your mineral rights to make sure you are not being taken advantage of, call our office at 304-845-9750. We offer a free consultation. We’re not going to judge you, but we can help you think things through and assist you and your family make the right decision for you.
There are brighter days ahead. Don’t panic. Not yet anyway…
Gold, Khourey & Turak has represented land and mineral owners in West Virginia, Ohio, and Pennsylvania on all oil and gas matters for over a decade. The results speak for themselves—GKT has secured hundreds of millions of dollars for oil and gas mineral owners throughout the Ohio Valley.