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.
Here's something I found from several years ago.:
Average royalty earned = $24,000 per acre
Posted by David Perotto on April 24, 2014 at 7:25pm in General Shale Discussions
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Based on the extraction footprint data we've collected over the years, the estimated life time dollar value of the gas produced by a horizontal unconventional gas well is slightly over
$190,000.00 per extraction acre.
If the minimum royalty percentage of 12.5% is applied to this per acre dollar value, the estimated lifetime royalty payments for an extraction acre (an acre of shale from which all available gas has been extracted) is slightly less then $24,000.00
The extraction acre production and royalty estimates are based on these criteria:
- Lifetime total well production of 4 billion cu/ft
- At the wellhead (ATW) gas pricing of $3.35 per Mcf
- A horizontal drilling bore 6,000 feet in length
- one-eighth royalties based on ATW pricing values
These estimates will vary significantly if any of the assumptive values are changed. It's worth noting that our research indicates that the estimated life time well production value of an unconventional gas well varies significantly depending on the source.
Ya, well, that is maybe what you can expect. I’ve seen a few royalty calculators over the years and I guess it all depends on production. I only shared with you what was given to me by our company rep. Nothing is cast in stone as I’m sure you are aware.
What's the current ATW gas price?
Here is a calculator for royalties.
Lots of moving parts in this question; any speculation determining the 'royalty per acre' will be just that....speculation..
1.) Size of the PRODUCTION Unit
2.) Number of your acres in the PU
3.) IP of the well(s) is a big factor
4.) Decline rate of the well(s) is a big factor
5.) And the real royalty driver (after the two above are established 18 months down the road).....the realized price of NG (after any deductions), which will vary wildly in a 12 month span.
Factors 1 through 4 will become knowns at some point; you will be able to solve part of the equation....until then....no. You can take some guesses, maybe incorporating producing well data in your area, but those numbers can vary wildly as well.
Factor 5 will always be the continuing variable.
true. SO many factors involved it would be almost impossible to tell someone how much their royalties will be.
The estimates given by Thomas Lilly & David Perotto are close. For a drilling unit with 4 laterals I figure them both close to each other, somewhere in the mid $20K range/acre. For Thomas Litty's I calculated the 1st 2 years at $21600/acre & guessed that most of the gas had come out in those 1st 2 years. I realize both are probably just wild estimates but it's interesting they both seem to come out fairly close.
Not sure about the duration of production on these wells. I think you can’t look at it as a static number as technology is changing the business From one year to the next. I have always kept in the back of my mind that I will probably see, if it all, royalties that will provide realistic income for 5-7 years declining from the start but, again, they are doing a lot of things lately including refracking which could change that figure.
The concept of re-fracing wells has been around for a long time....so it begs a question:
Does anyone have knowledge of a re-frac process performed on an existing Marcellus or Utica well in the PA/OH/WV plays?
I would appreciate being pointed to that well info, to gauge the success/results before vs. after the re-frac.
I am of the opinion, through postings here and elsewhere, that it hasn't happened here, and probably won't until all the 'low hanging fruit' (gas) has been developed and the price of NG settles in much higher that that of the last several years.
So.....anyone have a report of a re-fraced well?
haven't heard of any, and actually the completion technique (sliding sleeve vs plug and drill) influence the ability for a refrac to work. Furthermore, the results from refracs in HZ wells have been a bit mixed. Examples of refracs working in vertical wells are apparent in niobrara and codell wells in the DJ basin, and were quite common. However, the size of treatment area was limited as the wells were vertical.
Thank you Jeffrey.
How are you doing sir?