A reader writes, with regard to pricing North Dakota light sweet oil (Bakken oil):
I have been tracking the monthly average price of ND sweet and WTI since March 2010.
These prices are compared each month with the price for the month’s sales we receive from XTO, our largest operator.
The price we receive has averaged $6.00 per barrel more than the reported ND sweet price. The received price has averaged about $5.00 less than WTI.
However, breaking the WTI differential down I find that it has averaged $3.00 or less for the last two years.
Big spreads impacting the long-term average were experienced primarily in 2013 when there were some rather large spreads.
As a result, when I’m estimating prices, I use the WTI and back off about $3.00.
The NDS price just doesn’t give me much guidance.
I have no explanation for why we are so far above the NDS average but I like it!
The other three operators usually run a $1.00 of so higher than the XTO price so it is not a phenomena generated by XTO.
Thank you, very much appreciated. I'm curious what the experience of others receiving royalties from wells in the Bakken are experiencing. But that makes it pretty easy: during periods of less volatility in pricing it appears that ND sweet, light oil is about $3 less / bbl than the WTI quote seen.
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