I am receiving payments in Washington County and a couple of other locations. I own properties in 14 different locations in Western Pa. I also own property in Union Township, Washington County that will soon will be producing.
You are correct on how difficult it is to come up with a good estimate. There are at least 8 variables that will impact the royalty payment amount that could cause one to receive anywhere from zero dollars to $100k per month, for example on a 100 acre property. There are calculators out there, but you need to understand all the variables to use the calculators correctly.
If you need help give me a call.
PS If you are located in the north west corner of Washington, congrats since that is a great location.
There are several variables you will need to know before you can estimate royalty payments. Here is how to calculate what your gas income will be from month to month.
your acres - Acres you have leased in unit.
unit acres - The size of the unit.
% royalty - Royalty as listed in your lease.
your acres / unit acres X % royalty = your decimal interest
your decimal interest X total Mfc gas produced in one month = your share of produced gas
you share of produced gas X spot market gas price per Mfc = $$$ you will receive for that month
Remember this will only give you an estimate because of fluctuation in gas prices and deductions are not calculated. Also remember that as with all tight shale plays there is a 75% to 85% decline rate the first year , then it will gradually flatten out.
Probably the $100 an acre per month would be more realistic. To receive $3000 an acre per month at 20% royalty, in a 640 acre unit, at $4.00 per MCF, the well would have to produce 2,400,000 MCF of gas per month... and that is not going to happen. Look at what the wells are producing in your area, that can give you an idea of what you can expect.
You are failing to include the added profits from the condensates in the wet gas. I read somewhere that the condensates in our area can add upwards of 100% to the value of the gas.
They were claiming an added $3-$5 per MCF of gas sold. Not sure of the truthfulness of the numbers but it does add a fair amount of value i believe.
You are correct, I did not include condensates in the calculation because most Marcellus gas is dry gas. If you are in a wet gas area, then royalty would be somewhat more, depending on the bbls of condensates produced each month, but most likely would not reach $3000 per acre.
Now, the Utica oil play is a completely different set of calculations, that could possibly reach the $3000 per acre figure... I don't know.
yes the utica is what CHK is after in eastern ohio. and in our area they are finding not only wet gas, but also pokets of crude which was not expected. When you put the two together an average of 1000/ acre is being estimated based on the testing chk has already done. Wells in southern Oh are already at these figures based on actual well production. Now I'm like everyone else on here, until I see a check made out to me, anything else is worthless...
Are you in the production unit for that well Josh?
A guy told me that he talked to a man that owns 200 acres of the buell well and he claims that he is getting $5,500 per day off the well. If my math is right, that is $165,000 per month. that is $825.00 per acre per month.
According to the DNR site the Buell drilling unit is only 177.4 ac
I don't see anyone owning 200 ac of the unit.. part of his 200ac
may be in the unit..?