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Strategies & Market Trends : Natural Resource Stocks -- Ignore unavailable to you. Want to Upgrade?

To: JimisJim who wrote (94572)	11/19/2018 11:34:24 PM
From: isopatch	2 Recommendations Recommended By JimisJim roguedolphin Respond to of 108551

Despite being the September production period, EQT royalty check in todays mail is the highest I've ever received. Why? Due to much better regional pipeline access (from years of massive regional expansion) spread between local well head prices and NYMEX is fast approaching zero! Next few months prices are already locked in to assure even larger checks. Only reason it was possible to load the boat with quality mineral parcels, at bargain prices, almost every year, from late 2008 til year ago November auction? Local/NMEX price spread was huge and closed very slowly. So wide, it resulted in years of very lo royalty payments. That discouraged the - then - property owners from paying annual taxes and very good, tax delinquent, properties came to the annual auctions. Other than the cyclical top in late 2013 (and at the late 2014 auction) very good bargains were available if you carefully studied the localized geology and knew exactly what you were buying. Lots listed at last weeks auction, OTOH, were of much lower quality. Existing owners of good properties have been bombarded with local news of the pipeline expansion and even seen the work being done near state and county roads. Bottom line: Our multi-year, regional, buy window has closed. No quality properties were offered and no reason to go bid. As you and I have often tried to explain to others, investing in mineral properties is very different from investing in energy stocks. UR spot on that the long term big picture is by far the biggest and most important difference. The next biggest difference is listed stock companies use very large amounts of debt to finance leasing mineral properties, and pay for drilling & completing wells on them. We use no debt to buy acreage, nor do we pay anybody else to manage them. We manage what we own. Mineral owners also don't pay well drilling or completion costs. Our compensation, by law, is set at 1/8 of total well head revenue. For anyone reading us, there're many more reasons, than either of us have time to explain, why this specialized investment niche is very different and not appropriate for - even - the average LT investor. Time to log off for the day. All the best. Iso