Royalties per year from a well on your property.

We have been approached by Chesapeake to place a platform and drilling rig on our farm. We have 160 acres. What is the CURRENT rate being paid for the one time land usage? What is the current yearly royalties being paid?

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Replies to This Discussion

Permalink Reply by Utica Shale on April 2, 2012 at 2:48pm

Also,

" ... Total Royalty of $363/acre/month ..."

 assumed a new style lease at 20% GROSS !

 

 If you have a old style lease at 12.5% NET

 it would yield only $183/acre/month or LESS !

Permalink Reply by Utica Shale on April 2, 2012 at 8:00am

DBD,

 

 Per ODNR,

 The Mangun Well had ...

 322,435,000 cubic feet gas / 206 days = 1,565,000 cubic feet per day.

 or 1.5 million cubic feet per day.

 

Permalink Reply by Larry on April 2, 2012 at 7:59am
Thanks caculator time lol where are the NGL 's being posted any idea
Permalink Reply by Larry on April 2, 2012 at 8:39am
Not sure but by my understanding that is were the money is
Permalink Reply by PK on April 2, 2012 at 8:41am
The numbers ODNR posted are considerably lower than the number CHK released last fall. Perhaps CHK was overstating to drum up interest in investing in the play. Perhaps CHK has the wells choked right now because there isn't the infrastructure in place to transport and process the oil/gas/NGLs "locally", let alone "ship" them from a processing location to a "final destination". If the numbers aren't adequate to CHK then why are then continuing to drill all over Carroll County like they are? We see new permits almost weekly and a number of pads are under contruction and we have yet to see a permit. Does the flurry of activity tell us something?

I am only speculating, trying to put some sense to numbers that are lower than I expected.
Permalink Reply by Utica Shale on April 2, 2012 at 8:57am

PK,

 The numbers that CHPK released last fall were short-term PEAK Production Gas flow rates. Today we are seeing the real long-term Continuous Daily Production gas flow rate. It is theorized that a slower flowing well produces more total product over its lifetime than a well that is not choked down and is allowed to flow unrestricted. Once a well drops below its dew point and the gas condenses out, it is much more difficult to get the wet product out of the well.

 

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on April 2, 2012 at 4:28pm
Production numbers were weak, there's no two ways about it. Buell looks good for gas, but this data so far shows that the liquids bonanza that we were promised was inaccurate. Mangun averages 59bbl/day? That's not great, especially considering the cost of these things. They need to recapitalize within the first two years or conventional wisdom says the wells will never pay for themselves.
Permalink Reply by Utica Shale on April 3, 2012 at 1:56am

Marcus,

"...this data so far shows that the liquids bonanza that we were promised was inaccurate..."

 ODNR stated the Natural Gas Liquids , NGL's, are reported in the GAS column with the Methane and not the Oil column. So, how do know what the % NGL's was? I never expected much oil from the Buell well.

Permalink Reply by Larry on April 3, 2012 at 1:10am
Looks like after production results in. The average an acre a day is 28.51 a day minus the factor of NGL's unable to get that info hope this helps. Good luck with your decision. Doesn't look like you can go wrong. Have a good day
Permalink Reply by Utica Shale on April 3, 2012 at 6:58am

Larry,

 Good to see that YOUR calculator is working slightly better today, LOL!

 You stated previously that you would share the formulas.

 But I do not see any of your computations that produced your result of $28.51 Royalties/acre/day for the Carroll County wells.

 

 Mangun well example ( not counting NGL's, just like you did ) ...

 12,334 bl oil x $104/bl / 216 acres / 206 days = $28.83 Sales/acre/day

 322,435 MCF x $2.10/MCF / 216 acres / 206 days = $15.22 Sales/acre/day

 This well only had $44 Gross Sales/acre/day (not counting NGLs just like you did)

 at 12.5% NET Royalties that is only $5.50 Royalties/acre/day.

 

 How are you computing $28.51 Royalties/acre/day ?

 

 I use the Mangun well because it has been production for over 6 months.

 The other Carrol County wells have only been in production for 4 months or less. 

 

 You had stated in a previous message that Royalties were proven to be $2,660/acre/month.

 That equates to $87.21/acre/day.

 But today you say, "UH-OH", it is only $28.51/acre/day. Yikes!

 And I still cannot even justify that result.

 What happened to your "facts" ???

 

 

Permalink Reply by PK on April 3, 2012 at 5:37am
Without knowing the % of NGLs on the well it is impossible to get a halfway accurate idea of just how good these wells are.
Permalink Reply by Utica Shale on April 3, 2012 at 6:21am

PK,

 

 RE: Mangun well royalties calculation ...

 25% of the Royalties came from Dry Gas & very easy to estimate.

 25% of the Royalties came from Wet Gas & not too difficult to estimate.

 50% of the Royalties came from Oil & very easy to estimate.

 

 Even if the % NGL's were double or half my estimated %,

 it still does not affect the final answer that much.

 

 I will stick with my $350 - $400/acre/month estimate until proven wrong.

 Stating that you cannot perform the math does not prove my math wrong.

 

 And the result is certainly NOT $2,260/acre/month as Larry has originally stated.

 

 

 

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