- Bernie: resist!
- Buttigieg: change course!
- Biden: WTF just happened?
- Hillary: re-calculating, re-calculating, re-calculating ...
Tuesday, January 7, 2020
Notes From All Over, Part 1 -- January 7, 2020
US trade deficit plunges to more than 3-year low. No link. Easily found. The trade deficit is on track for first annual decline since 2013.
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Hey Bruce, do you have any thoughts on how an oil company calculates the average monthly price per BBL that mineral owners are paid. It is hard to figure in that the ND crude price and WTI price are always different and there seems to be no correlation between them other than it is always less..
ReplyDeleteUnfortunately not. If one is talking about royalty payments for individuals or oil company deposits into the North Dakota state Legacy Fund, I always assumed it was based on actual dollars the oil company received for their product.
DeleteIn a general sense, I always assumed an oil company contracted with a buyer -- generally a refiner -- to take so much oil at a certain price out in the future. On that date, the oil company would be required to bring that agreed-upon amount of oil to the buyer (the refiner) and the buyer would pay the agreed-upon price. These contracts would be negotiated months (?) before the delivery date. The negotiated price may not reflect the actual price we see reported in the news.
The big controversy you allude to, of course, are the deductions. Taxes are not in dispute, as far as I know. Rather, it is deductions for transportation, etc., that has folks irritated. I have no idea how that works.
Anyway, that's my two-cents worth. Hopefully folks will chime in if I'm wrong.
Slawson runs 2 months behind in paying royalties. So in understanding that market prices are for future sales, it can be 2-4 before I see effects of market moves.
ReplyDeleteHave also noticed price can vary by which refinery product is delivered to. Lastly ND sweet runs about 5-10% below WTI.
Its kind of look back and seeing forward at same time- if that makes sense- it sounded good in my head
It's very interesting that you would mention the price varying depending on the refinery which makes sense. And yes, that makes sense ... looking back and seeing forward at the same time. And, of course, the royalty check is not just from crude oil but also from liquid condensates, natural gas, and other products.
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