Boom or bust? How your royalty income could make or break your financial future
The last few years have been a whirlwind in the financial sector. But, honestly, when have they not been? Commodity prices are up, then down. Stocks are up, down, then sideways. Inflation is rampant, then tame. Royalty income goes up for a few months only to come crashing down. All financial markets are cyclical in the short run, creating havoc in planning.
With stocks, it is easier to spread risk by investing in mutual funds or ETFs, financial products that allow us to buy fractions of hundreds of companies to eliminate the proverbial problem of putting all our eggs in one basket. With minerals, that is harder to do. We are subject to the location of the minerals and the drilling plans of the operators. We also have no control over commodity prices, nor any way to hedge the cyclical nature of markets.
The best thing mineral owners can do is be informed – informed of WHY their income is going up and down, informed on HOW they can better predict income tomorrow.
Let’s face it, most of us are not from the oil and gas industry. We inherited minerals or bought them with a piece of real estate. Family discussions have led to an understanding that there are booms and busts over time that you just ride out. But most owners are missing the tools needed to plan and understand their royalty income.
Correlating your expected production and determining how it will affect your income over the coming years is not easy for an owner to determine. For many, you try to go to the state oil and gas commission to look at production or read at your dozen page check with hundreds of lines of data and codes to get some semblance of what you should be paid in the future. Many of you keep spreadsheets of past income thinking it will help predict the future. The problem is that you can’t take the past performance or income from checks being cashed to determine what you will be paid tomorrow.
MiQ+ provides an estimation of production into the future from all your wells. This allows you to take an assumption of oil and gas prices to determine expected annual income up to 10 years into the future. You can also look at the well level to determine expected monthly income from an individual well. MiQ+ updates the forecasts on all your wells in pay every month, then updates production and expected income accordingly. No more going to the state regulatory websites or trying to decipher your check stub.
If you like to track your income by well or operator to better understand monthly fluctuations, MiQ+ has single click exports to allow you to see your income at a more granular level over time. No more typing in data every month or having to maintain a custom Excel document.
Be informed. Be empowered.
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This could be the beginning of something great.