2014 proved to be a great year for clients of R. King & Co. We generated over $1,000,000 of royalty income from oil and gas leases we developed for our clients. One family saw production quadruple to 1,200 barrels of oil per day. In addition, five new client families have contracted us to develop and manage their family minerals.
With the collapse in oil prices, 2015 will be a challenging year. Lease activity has cooled. Operators are analyzing which leases to continue drilling, and which to let go. Most operators are reducing their drilling budgets and many are laying off employees. Nevertheless, the shale boom continues.
Despite the slump in prices, most of our clients are experiencing an increase in income. Even as the price of oil continues to fall, their production has tripled and quadrupled, causing a net positive cash flow in 2015.
Will OPEC members consolidate decision making and reduce production to stop the free-fall in oil prices? Will the malaise in the global economy continue to curtail demand for oil? Will the American shale boom continue to pressure oil prices downward? Will the current glut of oil move through the global marketplace in 2015 and allow the price of oil to return to $75 per barrel in 2016? These are the challenges we face in turning dormant minerals into income producing assets for our clients in 2015.
One thing is certain – Americans will find new ways to improve exploration efficiencies, decrease drilling costs and find new reserves of oil and gas. Are you a part of this unfolding story?