William Dotson, that sounds about right. $137.93 per month or ~$1655 per year. Over 5 years (and assuming no decline curve-which is a bad assumption mind you) that comes out to $8275 over 5 years. Taxed at 30%, you get roughly $5300 after tax. Thats magically in line to what you can sell them at in today's market.
Sorry to butt in; but it may be this is what the oil&gas co.s are up to. Keep short changing royalty owners to the point of it looking like it may be better just to sell the rights now. Then they can open up the choke and cash in ALL the money!
It's also magical for the buyer the well should last much much longer than 5 years, and then there's the possibility for additional formations. I always say....if you need to sell, find a local landowner who is already getting royalties and can see the value in buying you out. Chances are you will get a fair sale, and the benefit to your community is assets stay local and the income realized are taxed locally, and profits spent locally. Don't sell out on your community. Too many people around here sell to these mineral buyers and then a neighbor finds out and says, I wish they said something to everyone, or we would have baught it. You gotta think beyond the sales post card you get in the mail.
William, what price are you averaging each month for the gas, and for the oil, to get to your $137.93 per mo / net ac?
I used the actual price paid each month, including any LNG produced. So from Sept. 2013 thru Oct. 2018. Because of the LNG the price varies a little per well, but over the 62 months it is around $53.69/bbl and $3.57/mcf.
Thank you. Are these wellhead prices? Are you able to control how prices are defined? Do you map them to indexes which make them visible so that price definition cannot be hidden from you? Thank you again.
These are the prices the oil company paid. Obviously the LNG is not wellhead price. But i deduct the gas removed to make it then add in the dollars of the LNG sales to the gas income
Again, thank you. my prices and your prices differ significantly. I wanted to see if I can understand if I have a problem with the price my O&G is paying. I have tracked my O&G prices with the market indexes over a four year period, and my O&G is at about 60%, which I do not understand. I was expecting prices along the lines you mention. Do you have any insights you may be to able to please provide? This is the price my O&G is quoting, it has nothing to do with deductions, etc
When the well comes in has a lot to do with your avg price. The first year is the highest production, so if it comes in when prices are up your overall avg will be better. I'll show you some examples .. you will see the avg. price for the life of the well to date .. the based on is the number of months .. the avg. price is each months price divided by the number of months .. the avg/bbl or mcf is the actual money divided by the total production... you will see some are very close while others are way different:
|Avg. Oil Price||44.98||Avg. Gas Price||3.24|
|Based on||51||Actual Prod.||51|
|Avg. Oil/bbl||44.69||0||Avg. Gas/mcf||
|Avg. Oil Price||53.69||Avg. Gas Price||3.63|
|Based on||62||Actual Prod.||61|
|Avg. Oil/bbl||64.26||0||Avg. Gas/mcf||4.21|
|Avg. Oil Price||42.86||Avg. Gas Price||2.94|
|Based on||45||Actual Prod.||45|
|Avg. Oil/bbl||40.05||0||Avg. Gas/mcf||2.67|
I don't know if this is what is causing your figures to be off or not. Keep in mind that the original numbers for
were for several wells which gives me a good blend across several different years of initial production.
If people wish to sell why not just sell half of the minerals if cash is what some are looking for? Oil and gas is definitely a long game. There are lease holds from the 1800 that still arent producing. Let that sink in