On OGM rights, you are buying a future rate of return based on what the researchers believe the price point will be. The oil was valued with 9-11% returns but I believe 8-10% is more realistic for the long haul. OGM plays can be as small as $50,000 or as big as eight figures.
Along that long haul path, there can be lots of bumps. Did your power bill go up in 2022? When I bought the natural gas back in 2020, the futures were selling at about $1.95 MBTU with a five historic swing of $1.80 to $5.10. That 8-10% return meant that they were thinking the future's price was going to near that level for a long long time. In the spring of 2020, factories were being shut down and oil futures were even negative for about two days. (My stones are not that big to bet on oil when the price is negative - but boy do I wish I did looking back).
Of much of 2021, natural gas was trading in the $3 range. My 2021 1099, showed I was getting paid about 14% return on my investment that year. Then Ukraine occurred - Russia has lots of gas, but it has to pass thru specific pipelines to NATO countries. Natural gas futures spiked upwards of $10 MBTU. My wells in WV returned $24,000 on a $50,000 investment in 2023. The wells in SW Pa only returned $21,500 if my memory is correct. Just the same, I bought in expecting to $4,000-$5,000 each year.
Now gas has returned back to the $2.30 level. My monthly check from EQT was $460 way down from the $2,600 of nine months ago.
Most LLs would be surprised if you learned that your heating utility bill is locked in with a gas future price of over $4 a unit when the market is $2.3.
So what are my thoughts long term? Utility companies thought they were helping us out by locking in at $4 and consumers will be paying that for a while. That will keep natural gas a good buy at $2.3.
as for my quarter million play on Oil - the government has been trying to play games with the price of gasoline by playing the strategic reserve discharge game. We can let those reserves go only so low, then they have to be refilled. The refilling will cause gas to go up an extra 0.15 a gal. Crude is trading at $73/bar. With all this green energy talk, do you suppose drillers have a huge incentivization to drill new wells? If prices drop below $40/bar and stay there - things might get tough. But I foresee prices going up not down. We are at the low point in a year
My truck runs on oil not pixie dust. If the electric car craze picks up steam, you will need natural gas to to create the power to charge them up. Instead, I see gasoline lasting for 20 or more years. The inter-structure simply doesn't exist to support the green ideas. And so many environmentalist are publishing these papers from air conditioned office spaces. I am not saying climate change isn't real. I am saying - when there is a change, there will always be winners and losers. Here the winters are going to be harsher, but shorter....so more growing season for farmers.
I am alright with an income source paying me about 9%, and never calls me. --24.101.xxx.xxx