Production numbers are now available on the ODNR site for a well that is right next to our property. Seems like a good time to revisit a royalty calculator and do some speculation. I have a couple questions to help make that more fruitful.
I know my Royalty Rate. Anyone know if the common calculators assume a Gross or Net scenario?
Where is the best source for the Utica "wellhead price of natural gas in dollars per thousand cubic feet or Mcf"?
Production data asks for production rate of the well in millions of cubic feet per day or MMcf. I go to the ODNR site and find the production rates per quarter. Example 946800 listed in the gas column. I can't tell if that is a total for the quarter or a rate per day. Can anyone confirm?
How many of our acres are in the unit will be a guess. But I would like to know more about how this is determined. If I have 200 acres and they go anywhere under it, are all 200 in the unit? Or is there a distance from the run, that gets included
I would assume 640 is a good number for total unit. I can run a second scenario with the 1280 number as a worst case.
That's a lot in one post but I hope someone can help. I have been on and watching this site for nearly 7 years since this started. Great resource
Without knowing the details of your lease, here are some generalizations from a self admitted amateur.
The amount of your acreage included in the unit will be that which is contained within the boundaries of the Production Unit. This is determined by the direction the well travels from the well head and the length of the well, and there could be multiple wells in the PU. There is typically a setback from the wellbore. That number can be different in different States, but a number of 330' comes to mind. You could have all 200 acres in, or a very small percentage, depending on the 'lay of your land' in relation to the PU.
Unit size is hard to predict. That varies by producer, and can't be determined with any degree of accuracy prior to the PU declaration. 640 would be a suitable guess for a starting point. If you have the well plats, the guessing can be a bit easier.
I am not in Ohio, but it seems the 946,800 would be the output in Mcf for the quarter.
As far as the price the gas sells for, that is a moving target, which is not easily solved until production is actually sold. Can't answer that one.
I hope this doesn't come across as negative, but predicting all this is TOUGH!! Best of luck to your in your quest.
don't know what oil & gas company you are dealing with but when I sighned my lease with Chesapeake the landman told me they only needed the tip of my land .iasked will I get royalties on the whole 18 acres he said yes but when I got a copy of the pool declaration it had title acres 18 contract acres .00038 contract acres determines your royalties
See page 35 of Antero company presentation at:
Per that page a 9000 ft lateral generates 19.8 Bcfe. Average lateral spacing in the Utica is 700 ft, so a 9000 ft lateral includes 145 acres (700x9000/43560). As such each mineral acre contains 135,551 Mcfe (19,800,000,000/1000/145). Using a 20% royalty, each acre you own should generate 27,310 Mcfe. Using $3/Mcfe, each acre you own contains $81,930 in royalties under a gross proceeds lease (i.e. no deductions). Note Antero states transportation costs are $0.63/Mcfe, which would reduce the per acre royalty to $64,275 ($81,930 - 27,310 Mcfe x $0.63).
I am still learning the alphabet soup of this industry so pardon my ignorance. Ed, in the scenario you outlined from the Antero Data, is that an estimation for the life of the well? Or is Annual ( wishful thinking)
Life of the well, which is likely 20 to 30 years. So depending on unit size (640 to 1280 acres), you're going to have 4 to 8 wells per pad that are splitting royalties among the mineral owners in the unit. If you look at page 12 of the Anetro report, you will see they project 2 Bcfe per 1000 ft lateral being produced in 243 days.
Make your own projections with that data and the following data.
Go to the link below for an old article on decline curves (which have improved since this article was written), in which it states:
"An analysis of Utica wells tapped in each of the first four quarters — from July 2013 through June 2014 — shows natural gas production had dropped 65 percent, said Dr. Jeffrey C. Dick, a professor and chair of the department of geology and environmental sciences at Youngstown State University and an expert on Utica Shale. He estimated that Utica Shale production will drop 33 percent in the second year of a well’s life and another 22 percent in the third year. Decline is projected at another 17 percent in the fourth year, followed by 13 percent and 11 percent in the next two years, he said in a review that has circulated widely. A graph of the annual declines resembles a swimming pool slide — unmistakably steep at first then gradually leveling off.
See page 30 of the Gulfport report at the link below for a current Utica dry gas decline curve projection.