Advantages of Royalty Interest Ownership
- EQT (NYSE: EQT), is the Joint Venture owner and operator and natural gas purchaser of the acreage. The company holds a concentrated acreage position in the core of the Marcellus Shale consisting of over a million net acres. It’s a position EQT used to fuel a compound annual production growth rate of 31% since it started developing the Marcellus Shale in 2009. Despite that rapid rise, EQT still has plenty of room for growth. The company estimates that 18 trillion cubic feet of resource potential underlie its position. EQT is the largest producer of natural gas in the United States.
- The Net Mineral acres has 12 producing (9,000 feet lateral length) horizontal wells that have been in production since 2013 and 2015 and have been consistently averaging around 500,000 MMcf/month and are at a stagnant decline.
- A horizontal well can be fracked 3 times throughout its life which extends the life of the well and the reserves to be produced. Once EQT makes the decision to re-enter the wells and frack for the 2nd time and 3rd time, this is no cost to the royalty interest owner and could dramatically increase the monthly and annual return as well as the production lives of the wells.
- With no additional fracking, the wells could have a 40+ year life span which generates a monthly return for many decades.
- In 2019, the royalty interest owner made $195,924.90 in royalty revenue and natural gas price average for year was $2.40 and prices are closer to $3.00 in 2021.
- Royalty Interest ownership is one of the most conservative investments in oil and gas because you own the minerals underneath the ground for life and you are paid a % of the revenue stream from production on the acreage. Your monthly passive income stream has tax benefits .
- Investing in drilling projects are speculative and very risky for the investor because if the well is not commercially viable or a marginal producer could cause the investor to lose his/her entire investment.
- A horizontal well can be fracked 3 times throughout its life which extends the life of the well and the reserves to be produced. Once EQT makes the decision to re-enter the wells and frack for the 2nd time and 3rd time, this is no cost to a royalty interest owner and could dramatically increase the monthly and annual passive income as well as the production lives of the wells.
- As natural gas continues to increase in price, the passive income from the producing wells increases.
- Diversification in royalty interest gives your portfolio more stability and passive income and creates another strong investment in your portfolio without putting you in a risky situation for the monthly and yearly passive income for decades.
