Oil and Gas royalty calculator in upper corner of site

Has anyone that has actual data (receiving a royalty) compared it to the calculator? I am curious as to how accurate it is? 

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Replies to This Discussion

Permalink Reply by Philip Thackray on January 24, 2014 at 5:08pm

I got paid $3.57 for high BTU gas (ethane rejection) for production for November before deductions.  Here are the monthly average Henry Hub prices from the eia:

 http://www.eia.gov/dnav/ng/hist/rngwhhdM.htm

 So Henry Hub for Nov 2013 was $3.64 average for 1000 cubic feet of 1000 BTU/cubic feet = 1 Million BTU gas.

 The higher BTU gas should get a premium of the ratio of the BTU content of the high BTU gas divided by 1000 times the quoted Henry Hub price.  But I did not get that.

 But in general, back this far from Louisiana, I don’t think we can expect to get Henry Hub prices.  In time, PA may create its own market – that might support higher local prices.

 Phil

Permalink Reply by Philip Thackray on January 24, 2014 at 5:13pm

Henry Hub spot price closed at $5.345 today!!!

Phil

Permalink Reply by RB on October 12, 2014 at 10:14am

Matthew,

How have your royalty payments been going since you last posted here?  Just curious.

Thanks.

RB

Permalink Reply by Philip Thackray on January 28, 2014 at 5:27pm

Matthew,

 

Here in XTO /Rex territory it looks like deductions range from 20% (XTO) to has much as 23% (Rex).  I have said elsewhere, Rex is now hostage to Markwest for ALL midstream costs whereas XTO owns ALL their own midstream.  Range, EQT, Chesapeake etc ??????

 

Many landowners have an Audit clause in their leases (I don’t) but my lawyer feels that anyone should be able to audit the producer just based on the business relationship the lease implies and the fact that the lease does not say anything like “you can’t ask any questions”.

 

Of course, an Audit is bound to be an expensive event so I suppose that landowners would have to group together to perform an audit of an individual company.  I don’t know exactly how that might work.

 

As far as whether or not your wells “suck”, recent production figures are available at Marcellusgas.org .  If there are Marcellus wells that have been in production near you then you can check their performance against yours.  Here in Forward Township my unit (Marburger B) is very close to the Rex Behm pad and so far, the Marburger wells are producing close to the Behm wells.  The source of the production numbers used by Marcellusgas.org is probably available but I don’t know how to access that (anyone know?).  The production numbers touted in the Rex Corporate Presentations are quite a bit higher than the actual production numbers from Marcellusgas.org .

 

Phil

Permalink Reply by FairMktValue on January 28, 2014 at 7:22pm

Matthew and Phil --THANK YOU  --- 

Your posts have made my day!!!!

Let me explain..... I have been "negotiating" ( well more like both of us saying no repeatedly) with Rex for the last 6-8 weeks, landman is here about once a week. Down to only one sticking point....NO DEDUCTIONS ROYALTY.  

Nice friendly talks - but they have no counter to my arguments -they shake their heads and say "ya you got a point there .. but no.

They will not move - even though they have signed no deductions leases.

From what I have learned over the last couple years I  feel I would be insane to sign a deductions lease. But the last couple days I have been waffling just a bit, your posts have strengthened my resolve !!

My neighbor and I are a "doughnut hole" in possibly 2 units ( 1 marellus 1 burkett ) that could actually producing royalties in a year or two tops. Not directly blocking at this point but maybe down the road....   

Maybe I am crazy but, I just can not do it with the current information on deductions!  Pass me by, it is not life changing money but I would be kicking myself in the a$$ for as long as I live signing a "bad" lease.

Thank yall for letting me vent ... I feel better now.  LOL

I do have a lot of comments on both your posts, and if I get off my lazy butt and put them in some sort of coherent order I will post. Yes I will!! LOL

Cheers

Permalink Reply by LewPa on January 28, 2014 at 8:09pm

FMV

I just signed a 15% no deductions lease with Rex a couple weeks ago for the acreage they left out of the Stebbins unit which they lost and it reverted back to me. They wanted it back to put into another unit that supposedly they're going to drill this year. I would guess you saw  my updates on deductions awhile back under another heading. You definitely want a no deductions lease and work on all the other details. As the head of legal for Rex informed me: IF IT DOESN'T SAY WE CAN'T, WE CAN!!   LewPa

Permalink Reply by FairMktValue on January 28, 2014 at 8:21pm

 IF IT DOESN'T SAY WE CAN'T, WE CAN!

Thanks Lew - ain't that the truth!!

Permalink Reply by Robert Allingham on January 29, 2014 at 11:51am

" If it doesn't say we can't, we can"--- I'm NOT an attorney. I was under the impression that under Pa. law, a contract with ambiguity is supposed to be construed against the party that wrote the contract. Will someone explain to me if that is true or not, and if true, why do the gas & oil company's get their interpretation when sued?

Permalink Reply by FairMktValue on January 28, 2014 at 7:58pm

Hey Phil,

Just thinking out loud about the audit clause....looking at a Rex right to audit addendum...it does say at Lessors sole cost and expense but, I am "assuming" that they would have to produce records at no cost to Lessor ( assuming key word here). That said , it may not be cost prohibitive to get together and hire a accountant for a day or two . Really only need to audit the well in question, not the whole company. At the least would "rattle the cage" a bit. If initial look flags some dependencies .... well....

IMHO this is going to be an issue down the road as more people start to get checks!

Permalink Reply by FairMktValue on January 29, 2014 at 7:07pm

Matthew, 

Thank You for your support!  I will "stick".... NO deductions or no lease!

I may be hard headed .... but I can live with no lease rather than a bad one.

Providing records for an audit ----- with an audit clause I would believe they would be required to provide the records without resorting to legal action. But along the lines of -

 IF IT DOESN'T SAY WE CAN'T, WE CAN! ---they could possibly attempt to charge some outrageous fee for retrieving and copying the records etc.  Not very good PR but who knows.

In my past working experience (large heavy industrial engineering and construction co on large multi million dollar contracts)  audits were a routine business practice. Minor pain in the butt usually resulting in minor tweaking of the numbers by both sides.

But... given the fact that the O&G companies view leaseholders as a necessary evil at best...likely would not be very cooperative .

Perhaps I need to ask the question on the main thread "Has anyone attempted an audit? "

Cheers

Permalink Reply by Philip Thackray on January 29, 2014 at 7:19pm

FMV,

Most of the deductions are mid-stream expenses and that is all Markwest now.  At an audit, Rex will just show you the Markwest bills.

Auditing sales might have some meaning.

 

At a 15% royalty, typical deductions are worth 3% points - that is; actual royalty is 12%.  Perhaps there is a middle ground - split the difference and demand 16.5% with deductions.  As prices improve, the deduction percentage will go down.

 

Remember "the best is the enemy of the good"!

 

Good luck!

Phil

Permalink Reply by FairMktValue on January 30, 2014 at 10:16am

Remember "the best is the enemy of the good"!

LOL Phil ....I think about that all the time!!!!

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