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Permalink Reply by Frank Walker on April 9, 2011 at 6:10am

Yes, the four additional wells will likely pay much better than your four existing ones.  It's because I expect the price of natural gas to be going up . . big time.  This most especially if there is a change of President early in 2013.  

 

It's tough to estimate decline curves and I won't try.  Suffice it to say the wells will produce a little less each month with the passage of time.  But they will likely continue to produce something for twenty years or more . . . though nothing like they are putting out now.

 

Also, you also can figure that at some point the wells might be re-stimulated.  If that happens, it will fatten your check a bit.

 

 

 

 

 

 

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Permalink Reply by Mardale from Bradford County on April 16, 2011 at 2:41pm

Great to me is around $500 an acre for first check, third check just came and production is down considerably, about 15% down. There goes my Cadillac.

 

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Permalink Reply by hunter777 on April 16, 2011 at 5:23am

Over here in Susquehanna County, there have been producing horizontal wells that are currently producing 15-20% of the first month's production after a period of 24 months. So if the first check was $1000, the 24th check might be $175. The decline is gradual over that time period. A dollar figure per acre per month that I've seen is as much as $1000/acre/month at the start of a good producing horizontal. Obviously, gas price, royalty percentage, and other factors will make that vary widely.

I suspect that newly drilled wells, even from the same pad would produce the same results, since they would target a different area.

It is anyone's guess as to how long they will produce, but the consensus is anywhere from 20-50 years. Re-fraccing after 6-10 years will re-stimulate production, and new fraccing technology is being developed as the Marcellus is still a learning experience. There are rumors of using existing pads to drill for new layers of shale-producing gas also. Who knows what the future may bring?

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Permalink Reply by FXEF on April 16, 2011 at 10:11am

Mardale,

 

These wells will most likely produce for many years, however there is a decline rate with all gas wells. Chesapeake Energy reported in October 2009, their Marcellus Shale gas wells have an actual production decline rate curve as follows:1st Year – 70%, 2nd Year – 33%, 3rd Year – 22%, 4th Year – 17%, 5th Year – 13%, 6th Year – 11%, 7th Year – 9%, 8th Year – 8%, 9th Year – 7%, 10th Year – 6%.

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Permalink Reply by Frank Walker on April 17, 2011 at 3:20pm

I'm in NW Bradford. Having now received my second royalty check, I have to agree with other posters. I'm thinking much less than prior that "the money is in the royalties".

Couple of things:

I received a wonderful bonus and the gas company has been great to me. I'm certainly not complaining and I consider myself very fortunate indeed. It's just that I did not anticipate the royalties falling off like this. I think it could be the area where I live. Perhaps landowners where the shale is richer will do much better. For them I hope so.

I know this will sound nuts, but I do feel a bit guilty about the size of my bonus and a little sorry for the gas company. I do not see how they are making a fortune on this deal. Probably I simply don't understand. But from what I'm seeing, the money just is not there. And no, I don't think the gas company is dishonest or under reporting production.

There is one caveat:

If they are choking the wells then it would explain everything. I have no way to know. Again not a complaint. With the price of gas being so low I would understand, and even agree with choking. But I thought I should mention this.

My bottom line counsel regarding royalties is straightforward:

Think twice about spending royalty money which has not yet been paid to you.

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Permalink Reply by FXEF on April 17, 2011 at 4:07pm

Frank,

 

Flowing these shale wells on a large or open choke could damage or kill the well. Probably an 30/64 or 28/64 choke would be common to most Marcellus wells, however choke size can vary depending on the operator. The operator will choke the well where it can recover the maximum gas and profits. The more the operator receives, the more the royalty owner will receive.  

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Permalink Reply by Robin Jackson on April 18, 2011 at 9:18am

Good for you!!! I recently drove through Bradford Co..from Brians meats all the way to Canton the back way and boy was I surprised!!! Where isn't there a well?

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Permalink Reply by Deci Ruiz on April 19, 2011 at 11:35am

I agree I think the "choking" is because of the fact that the demand is not up yet, it takes time to put everything in place
When the people get behind this and really believe we can move to natural gas then the royalty checks will be great.
I think the gas companies would benefit from putting more money into educating people we need to get off Mideast oil.
If we had more "natural gas" stations I would be driving a car that runs on natural gas. I do think the trucks and buses are a start but "John Q public" will bring this to pass if you (oil companies) show them that we can. No more of our men should die for oil when we have natural gas under our feet.

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Permalink Reply by PA roughneck on April 23, 2011 at 2:17am

Frank and Mardale,

  a bit off topic/ but just thought you both might want to know- actually saw this very post cut and pasted on

Huffingtonpost, while browsing through the anti-drilling fear mongering posts.

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observingstupiditydaily   07:44 AM on 4/18/2011

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What me Worry? I found these posts on this discussion forum in PA: We own 35 acres in Columbia Township, we are signed up with Talisman.
We have recieved are first royalty check it looked great.
My question is - how long can we expect royalty checks like this to last?
I have heard that 2/3 of the gas will be removed from these wells in about 2 years time.
Talisman only drilled 4 wells so far, they have plans to come back and drill 4 more.
When the 4 new wells are drilled can we expect another 2 year windfall?
Also how long will these wells be producing, even after the initial gas surge?
Love Bradford County!
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Permalink Reply by Frank Walker on April 9, 2011 at 1:10pm
Yes, the four additional wells will likely pay much better than your four existing ones. It's because I expect the price of natural gas to be going up . . big time. This most especially if there is a change of President early in 2013.

Did you catch the last bit, especially if there is a Republican president in other words and the EPA is thrown under the bus. It's all about the royalty checks not longevity.

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 link here-http://www.huffingtonpost.com/2011/04/17/fracking-report-carcinogen...

 Not to say that we on this forum should begin watching what we say on a public forum, but just to give everyone a heads up. Just an example of what certain groups can and will do using our own discussions to try and further convince some folks that those of us in favor of the safe, responsible extraction of this resource are little more than greedy landowners.

                                                                                                      Best wishes and a blessed Easter,

                                                                                                                                       Ross

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