average royalties / acre?

   I wanted to try and calculate what the royalties per acre would be from the average Utica well over the life of the well for a person that had a 15% royalty %. I would assume the well has about 640 acres in the unit & has 3 or 4 laterals say 8000 feet long. If it makes any difference I was going to assume the well was drilled by Gulfport in western Belmont County.

   I was going to go to the Shalecast website and use a well right beside me to do the calculations but the site is gone.

   Any guesses?

   

Views: 5948

▶ Reply to This

Replies to This Discussion

Permalink Reply by Ed on May 11, 2019 at 11:38am

See page 35 of Antero company presentation at:

http://s1.q4cdn.com/057781830/files/doc_presentations/2017/11/Compa...

Per that page a 9000 ft lateral generates 19.8 Bcfe. Average lateral spacing in the Utica is 1000 ft, so a 9000 ft lateral includes 206 acres (1000x9000/43560). As such each mineral acre contains 96,117 Mcfe (19,800,000,000/1000/206). Using a 20% royalty, each acre you own should generate 19,223 Mcfe. Using $3/Mcfe, each acre you own contains $57,670 in royalties under a gross proceeds lease (i.e. no deductions). Note Antero states transportation costs are $0.63/Mcfe, which would reduce the per acre royalty to $45,559 (57,670 - 19,223 Mcfe x $0.63).

Using just $2/Mcfe for the entire life of lease, each acre you own contains $38,457 in royalties under a gross proceeds lease (i.e. no deductions). Using $0.63/Mcfe for transportation costs reduces the per acre royalty to $26,336.

Permalink Reply by Jeffrey Beunier on May 13, 2019 at 5:10am

Duetchen - if you tell me the township in Belmont, I can run economics/production forecasts for a couple of the wells over there and let you know.

As others have pointed out, the royalty clause ,net vs gross, is important and can result in 20% to upwards of 60% of the gas revenue lost due to deductions. 

Operator has influence as well - Ascent wells tend to perform better than other operators. 

Well vintage is important - earlier wells (prior to 2015) tend to perform slightly below current wells, dependent on operator. 

Location matters - western Belmont wells may contain liquids, whereas eastern Belmont wells tend to be dry gas. 

Well spacing impacts as well,Rice and others experimented with 750' or less spacing, however it was clear the wells were interfering with each other and resulted in lower EUR's per well (but may have resulted in higher EUR's per acre).  1000' or better tens to increase EUR's on a per well basis, but results in more acres per well, and therefore less $/acre in royalties all else the same.

I have production curves for the majority of Utica wells in the dry areas Belmont, Monroe, etc and can provide you some rough estimates.  Let me know the $/mcf assumptions, and whether you're looking at gross or net (lease term) and I can send you a ball park figure.

regards

Jeff

Permalink Reply by deutchen on May 13, 2019 at 6:34am

I am in Union twp. There are 4 Gulfport wells near me: the Eagle Creek well, Triple B well, Family well & Sandra well. 

My lease has no deductions for transportation or anything else. The royalty percentage is 15%.

I don't know what the current $/mcf is. I'd assume that in any calculations.

Thanks very much for your help.

Permalink Reply by Jeffrey Beunier on May 13, 2019 at 6:46am

Are you in one of the units?  If so, which and how many acres is your parcel (the part that was included in the unit)?  Based on those components we can calculate your division of interest (#acres/unit acres * Royalty rate)

It appears that you are on the edge of the wet gas area, and there would be some associated liquids (NGL's) - if you have check stubs/revenue statements do you see NGL and/or oil revenue in addition to natural gas revenue?

Permalink Reply by deutchen on May 13, 2019 at 6:49am

I'm sorry. I'm not sure.

Permalink Reply by deutchen on May 13, 2019 at 7:28am

No I'm not in any of these units. Two are right beside me though. I own property on both sides of I-70 with 178 gross acres included in that & according Gulfports lease analyst some or all  of my land is scheduled to be in one or more units. They have been making their units around 640 acres with  3 or 4 laterals about 8000 feet long but I'm not sure how much of mine will be included in that. If I knew what the royalties would be for someone owning one acre of say 640 that would give me some idea of how much I might expect under several possibilities for how the units were set up.

Permalink Reply by adam sorell on July 22, 2019 at 4:55pm
I got a buddy in jewett ohio. in the beggining of the well he got about $70 an acre for about 10 months. now he gets about $22 an acre. this is 20% gross royalty lease

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service