I live in Belmont County. I own 170 acres and am under lease to Gulfport. About 100 acres of my land is "landlocked", situated between interstate 70 & Gulfport's Eagle Creek well so it is very unlikely it will ever be drilled. I'd heard that the other 70 acres might be including in a drilling unit in 2021.
I've received an offer to buy the mineral rights for the whole 170 acres, not just the 70 acres. I'm trying to decide whether to sell or not. One consideration is how much I might make in royalties if I were to wait & they'd actually drill under the 70 acres.
I'd like to see if any people could give me an estimate of what a monthly royalty check might be per acre with a 15% royalty percentage. That might help me decide.
I know there are people out there who say you're a fool if you ever sell your oil & gas rights. I'm not interested in that noise. I'd just like to have some guess as to what I might receive in royalties so I could weigh that against the offer of a sure thing now.
Your property is in the wet gas zone. Gulfport has most of the acreage in your vicinity. Per their investor presentations, they've settled on 1000 ft spacing for wet gas wells, and historically have drilled 8000 ft laterals. Of course that could change, but both Eagle Creek and the Family well pads have three laterals on 650 acres. Conservatively, I'd recommend using those numbers for royalty $$ calculations. GPOR hasn't drilled in the wet gas zone for the past few years, and has stated they do not intend to do so in 2018. That could also change as NGL prices have risen nicely recently. The bad news is wet gas in your area needs to be processed twice through both MW's Cadiz gas processing plant to separate NGL's out of the gas stream. Thereafter, the resulting Y-grade is sent to their Hopedale fractionator for separation into NGL components. This is an expensive proposition and explains why no wet gas drilling has occurred in Belmont county the past few years.
As others have stated, it's all a craps shoot. Welcome to the Oil & Gas world!
You have made one very erroneous assumption: namely, that a portion of your property is landlocked and thus can’t be produced because it can’t be drilled. Taint so. Here in Louisiana, I just received notification of Chesapeake requesting permitting on two cross-unit-laterals (CUL) which will run nearly two miles laterally about two miles beneath the surface. They will be producing my minerals from a wellhead 1.5 miles away.
I strongly suspect that drilling procedures in your AO are similar. No oil company needs access to your surface area to drill a lateral well to extract your minerals.
So if you are making any calculations based on the assumption that your acreage can’t be produced...
you need to go back to Square One and refigure.
I have a similar question to the laws about drilling under interstate roads, and that is railroads. Who regulates/decides that issue? Is it a governmental agency or is it case by case decision made by the railroads themselves? Are there units that include rail property?
Our lease was not renewed and part of the reason cited was proximity to tracks which border land on two sides.
Thank you for all the valuable information offered here. I live out of state and this site has kept me informed of issues through the years.