The 2015 Oil & Gas Price Collapse

You may have experienced the realities of the inherent risks in the oil and gas business. As of January, 2015, oil prices have dropped approximately sixty percent in just a few months and natural gas prices have slid about one third in less than two months. While we hope for a quick bounce back, history doesn’t encourage that hope. The oil and gas business is cyclical and these cycles take time — sometimes five to ten years of time to cycle back up. Caple Royalty Services has ‘preached’ this truth throughout the last four years, not knowing when or why the cycle will downturn but knowing that it will just the same. At this writing, Raymond James & Associates, a highly respected financial services company that is quoted often in media for projections of oil and gas prices, has decreased its estimate for 2015 oil and gas prices to $63/BO and $3/MCF of gas.

At any given time, one can find vastly varied forecasts of oil and gas prices. As it stands currently, only time will prove who was correct. In the meantime, you may want to research the history of oil and natural gas prices on the U.S. Energy Information Administration website at

As you will see and as we have experienced, these down cycles usually take an excruciating number of years to cycle back to the highs of the past and; in this most recent downturn, the Saudis are promising that we will never see such highs again. Downturns, unfortunately, reveal that our financial houses are not as in order as we would like to have believed. Warren Buffett has been quoted saying, “It’s only when the tide goes out that you learn who’s been swimming naked.” We are all tempted to push the booms to the max and live as if the tide will never go out while fearing prudent financial decisions when we see how much can be gained by staying in the game with all mineral interests. We forget how much can be lost in the form of lost revenue, un-drilled wells, lower or no lease offers and greatly discounted mineral purchase offers.

Given this down cycle in the industry, what can Caple Royalty Services do to maximize your financial gains? The short answer is: in the vast majority of trades made for our clients, we gain a twenty to fifty percent increase in the trade terms our client originally brought to us. Sometimes that increase has been as much as 500% over the best trade terms that experienced mineral owners had secured!

In short, we can minimize the pain of the down cycle if you need to sell by securing offers on your minerals that will be near or better than what you would have received negotiating on your own, prior to the downturn. This is a bold claim that is applicable to minerals located in the proven oil and gas areas. Unfortunately, minerals on the edge of fields have very little value during downturns and even great marketing can’t overcome the ‘location’ issue.

When you are leasing or selling your oil and gas mineral and royalty rights, Caple Royalty Services can assist you in closing a deal that maximizes your property’s attributes, leverages our experience in negotiating thousands of oil and gas leases and mineral or royalty sales, and results in the best trade terms possible. You can benefit from our services financially and from having an excellent contract in place all of which yields peace of mind for our clients (view client references.)

Boom times in the oil and gas patch sometimes create false confidence among mineral owners in their research and negotiation skills. They may have engaged the land man to pay fifty percent more bonus and provide more royalty, assuming bragging rights have been won. That is the way the oil companies want you to feel! In reality, you may have been able to get five times the bonus and twice the royalty that was offered to you in a lease trade but; this is NEVER for certain until engaging a competent advisor such as Caple Royalty Services to do the necessary research, marketing, negotiating and due diligence required to accomplish such a trade.

The same rules apply to a sale of your oil and gas minerals, royalties and reserves. Although you may feel you have successfully negotiated a deal due to a proposed thirty percent increase in the buyer’s offer and the buyer may have even agonized over paying your price but, the reality may have been that you were negotiating with the wrong buyer and sold your mineral interests for half of what the right buyer would have paid. If you are looking to find the right buyer who will pay the best price for your oil and gas minerals, royalties and reserves – call Caple Royalty Services today.

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