HOUSTON (AP) – The price of oil fields in West Texas has come down due to the coronovirus epidemic, which has led to decreased demand for crude oil.
Ellie Huffman, a land broker and attorney for the Houston-based Lone Star Production Company, said she saw land prices for the property go below $ 1,000 an acre, which cost more than $ 10,000.
“When (oil) prices are so low, no one is buying land,” Huffman said. “Everyone is risk-averse at the moment.”
According to Norwegian energy research firm Ristad, the average price of US shale acreage has fallen by more than 70% in two years – from $ 17,000 per acre in 2018 to $ 5,000 per acre in 2020.
Despite this, the prices of some chalet plays have increased, the Houston Chronicle Reported. The Permian-Delaware Basin is still valued at $ 30,000 per acre and the Midland Basin is valued at $ 17,000 per acre, Ristade said.
But if the oil shortage and lockout keep the pressure on petroleum demand, then the depreciated oil and gas prices will not see a sharp jump.
“We do not expect demand for rising (oil) assets in the coming quarters,” said Alissa Lukash, a senior analyst at RESTAD in Thursday’s report.