Replies to This Discussion

Permalink Reply by Finnbear on September 29, 2011 at 2:14pm

No, it depends on what they have leased around the original unit, and how the surface conditions allow access.

Permalink Reply by Finnbear on September 29, 2011 at 3:40am

Surface Location = where the well pipe comes out of the ground - this is where the drilling rig starts the well.

Entry Point = where the well bore enters the target formation, this is generally somewhere along the curve that transitions the well from vertical to horizontal.

Target Point = the bottom of the well which is at the far end of the horizontal leg - this point is mapped on the surface but is actually thousands of feet below in the target formation

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Permalink Reply by Philip Brutz on September 29, 2011 at 8:20am

Assuming a 17% gross royalty how do you estimate what the per acre royalty is for this well?

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Permalink Reply by Frank Moll on September 29, 2011 at 9:59am

Rough numbers would be dry gas ($4 per 1,000cf) would be worth $4,000 per million cubic feet and wet is roughly $75 barrel. So 9 million cf dry is 36k a day + 105k a day for the 1,400 barrel of wet for 180k a day total. Divide that by the 177 acres for 1,016 per acre production X your 17% would be a payout of $172 per acre per day or 30k per day for the whole lot. Again keep in mind that no one knows much about these published numbers. They were much lower when they announced earlier and then went way up for their wall street press release but regaurdless it is somewhere in between which is very good

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Permalink Reply by Tony on September 29, 2011 at 11:10am

So everyone who has acreage inside the unit makes $172.00 a day , per acre?

Permalink Reply by Frank Moll on September 29, 2011 at 12:51pm

yes if those production rates hold up and you have 1 acre in this plot you would get 172 per day

Permalink Reply by Tony on September 29, 2011 at 1:51pm

And the Buell Well is pumping 15 million cubic feet a day?!?

Permalink Reply by Frank Moll on September 29, 2011 at 2:18pm

last report is 9 million cubic feet of dry a day and 1,400 barrels of wet a day but those numbers will more than likely drop quick once they let it flow

Permalink Reply by craig on September 29, 2011 at 2:22pm

$172/day/acre is only true if they can actually bring that much to market each day.  Maybe they will only be able to actually sell and market a portion of that amount, depends on demand and infrastructure.

Regardless, it is one heckuva good thing!

 

Permalink Reply by Finnbear on September 29, 2011 at 2:26pm

If the infrastructure cannot accept the full capacity of the well or the demand is not there for the products coming out of it, it will only serve to flatten the decline curve and give the royalty recipient a more even payment for a longer period of time.

Permalink Reply by Frank Moll on September 29, 2011 at 2:26pm

true but they Ches already negotiated deal with local refinery to take wet gas via tanker until they get ample pipelines in. They will find a way to deal the liquids due to much higher margins but may slow dry gas down until ample pipelines and market can handle which is why there is such a buzz in our area right now, its all around the wet

Permalink Reply by Finnbear on September 29, 2011 at 2:30pm

Word on the street is that refinery does not have the capacity to handle much more than it is now.

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