How much per acre in a monthly royalty check ? Certainly it would depend on a few or maybe many factors ..... but give examples if you have them please.
If someone has the figure for drilling in a section ( say about a square mile or 640 acres ) and how many wells were drilled ( horizontal or verticle ) we could then do the math for the size of our acerage included in the section. Or for others who may own many sections etc.
A division order comes from the drilling company after completion of the well and after production has started listing your "division of interest" in the well's production, that is , your acreage divided by the production unit acreage times your royalty percentage.
An example would be 10 acres / 150 acres x .125 = .0083
Your monthly check might look this way
Monthly well production (say 50,000 mcf) x $5.00/mcf x.0083 = $2075 to the landowner.
Thanks! I'm not understanding the difference between the intial pooling notice. Example. Say you have 26% of the unit listed in the pooling notice. Wouldn't that mean you are paid based on that figure. Why is division order needed after that?
if you have a 640 acre drilling unit and you own 160 acres of minerals leased at 1/5 royalty and the price of gas is $5.00 per thousand and you have 1 well delivering 5 million cubic feet per day into a sales line your calculation would be:
160/640 x 1/5 or .0500000 unit royalty; .05 x 5,000(daily production) x 30 days x $5.00=$37,500.00 per month as long as the production remains at 5 million per day.
The decline curve for shale is rather steep so the daily rate will decline relatively quickly.
Cabot has listed the following amounts in various news statement: figure about 1 MMCF/day initial production from a vertical well, and between 4 and 14 MMCF/day (based on horizontal leg lengths of 1000 feet to 5000 feet respectively) for horizontals. A lot is dependent on the length and number of frac stages. As the length increases, so does the unit size, usually. Those are initial amounts for the first month. Figure about one fifth of that after one year.
Since the gas companies are planning on setting up their units in something like a square mile unit and apparently not based on the coverage footprint of a specific well, one really can't come up with a monthly royalty amount. Being part of a mile square unit will probably do two things: temporarily reduce royalties for those on whose land the first well is drilled and then extend the royalties over a longer period of time as more wells are drilled later. In other words, the owner of the land where the first drill goes down may receive less in the early years but much more in the later years. I have heard that the"average" acre in the Marcellus holds between $250,000 and $500,000 worth of gas. Multiply that range by your acreage, royalty percentage, and an estimated price of gas and you might get close to your total royalty between now and the time it runs out.
I guess we need to plan for disposing of our royalties after our death. Charitable foundations anyone?
What makes this site so great? Well, I think it's the fact that, quite frankly, we all have a lot at stake in this thing they call shale. But beyond that, this site is made up of individuals who have worked hard for that little yard we call home. Or, that farm on which blood, sweat and tears have fallen.[ Read More ]