Increased Oil Production Stimulates Mineral Royalties Sales


As reported in the WSJ, growing North American Oil production has benefited the US in two main ways, by providing additional energy security and independence, and by stabilizing world oil prices. Indigenous crude within the US helps offset global production reductions, limiting the price swings experienced historically. This new US production acts more as a stabilizer to global events than a catalyst for pushing prices lower.
Global inventories from the world’s major producers (i.e. Saudi Arabia) helped minimize the impact of reduced Iranian oil output when the US placed economic sanctions in response to its nuclear ambitions. State Department officials have commented that the new US shale oil and Canadian oil-sands have been essential to dealing with broader Iranian issues. North America has added around 1.8 million barrels of daily oil production in the past two-years which is expected to continue to climb.
Mineral and royalty owners benefit from the increased oil production. However the timing of that development remains elusive.  Therefore the decision to sell minerals and royalties, can be a good one to cash in on a portion of their value today while waiting for production sometime in the future.


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