There is a unique opportunity for mineral buyers for a few months.
We all know the economic effects of Covid. High unemployment, financial stresses, sometimes a lingering sickness and an uncertain future. In Texas we have an additional economic stress from Covid with the fallen price of oil. So mineral owners/royalty owners have felt the extra economic squeeze as the lower oil prices diminishing their monthly checks.
Every month that passes, the economic pressures get worse. It isn’t linear, the longer you stay unemployed and the closer your bank account is to being empty, your stress increases exponentially. Some of these households are being stretched real thin financially. They need access to funds. Pew Research found that of middle income families, 25% cannot pay their bills in full. Even upper class is under stress, the number it 11% that can’t pay their bills in full. And if we talk lower income, that number gets high, 53% can’t pay their bills in full. These numbers are all higher by 5-12% compared to before the Pandemic.
On the other side of the isle are some mineral acquisition companies that diversified into other, highly affected asset classes that Covid has brutally disrupted and they are selling out for liquidity to stay alive.
Together, there exists a window of opportunity for buying minerals this Spring. We have seen a strong uptick in new institutional money starting mineral acquisition funds, and a surge in old clients getting back into the game.
The longer the economic disruption of Covid lasts, the better for the mineral buyers out there. This is one scenario where time is on the buyer’s side…but only for a while.