Royalty amounts

So I know this has been beat to death, and I'm aware of the variables involved, and also the resulting variations in royalties...........BUT......... A person I know who is in a unit currently being drilled was told by someone with the drilling company that he could see $50,000 per MONTH in royalties.  He owns 60 acres.   Is this even possible for a Utica well??   Even if it was a great producer, and the well had several laterals, and it was a small unit, it just doesn't seem likely to me.  They told us when we signed leases that the signing bonus was "chump change" compared to royalties, but that amount just doesn't seem possible.  By that I mean I can't wrap my head around a gas well making so much $$ to where they could afford to pay one landowner that amount.   I asked again if he meant that amount is what HE could see, or what the whole UNIT would see, and he said again he was told this is what he could be getting.   Oh and the kicker?   His property was HBP by an old Atlas well, so he's at the 12.5% rate also!!

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Permalink Reply by David Perotto on January 7, 2014 at 12:53pm

No, that is not a reasonable expectation. Rough numbers, that is $1,000 per acre per month. Maybe in the first quarter of production, but the decline curve will kick in quickly and knock that number down. An extremely successful well will reap $20,000,000 over the entire life of the well. Divide that by say 130 acres gives you $153,846 per acre, multiply by royalty rate,.125, = $19,230 per acre for the entire life of the well.

Permalink Reply by Mark Allen on January 9, 2014 at 5:26am

what deductions, gross gross royalty is what we all got is it not...tongue in cheek.

Dang gone it, that so-called market enhancement

Permalink Reply by Jeffrey Stoll on January 8, 2014 at 8:00am

so why would there be companies wanting to give 13/14/15k per acre for your mineral rights? To get 19k over 20-30 yrs?

Permalink Reply by harleyowner2003 on January 12, 2014 at 8:43am

That would not make sense!!

Permalink Reply by bo boboski on January 12, 2014 at 9:23am

Those offers are in areas where landowners with 20% gross deals will be seeing AT LEAST  $1500.00 per acre,per month, per well. With multiple wells on each pad;  you do the math!

Permalink Reply by adam sorell on August 29, 2014 at 4:25pm

I think the number is $153,846 per acre the company would be receiving according to David.

Permalink Reply by Mark Allen on January 9, 2014 at 5:24am

your off a bit here, it would figure closer to $39,500 for the life of a well at 25 years.

we are seeing per acre per month at a range of $285 to $817 so simple math tells me x 60acres at$300 gets $18,000 a month. Factor in the decline curves , I would push the amount higher in the western part of production, where $92.00 per B are common.  This months checks in gas  should be $4.00 plus mcf

NOT $1000per acre per month, but, if you times it by 6 wells or 8 wells per pad, then we have something to discuss.

Permalink Reply by Todd on January 7, 2014 at 3:39pm
Where is his property located?
Permalink Reply by The Hiker on January 7, 2014 at 4:32pm

If he is in one of the big Monroe County units, that figure is believable for the first year, even at 12.5% and after using a modest decline rate.

Permalink Reply by Poor Me on January 8, 2014 at 12:39am

BIG LIE.  Me n/e pa. 20% R ,no ded, $200 per month per acre for first 6 months production.

Permalink Reply by Poor Me on January 8, 2014 at 1:31am

My opinion on our extra money is that it is a godsend.I worked very hard for 55years all of my life. No matter what we receive it will make our lives a lot easier,giving all royalty owners and their families more time to enjoy their lives.

Permalink Reply by Todd on January 8, 2014 at 7:26am
Poor Me,
Is that for one well? How many acres in the unit? What is your decimal interest?
Thanks,
Poor Todd :) lol - I like your name!

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