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Permalink Reply by paleface on March 17, 2013 at 4:09am

 I would think if you were in one of those high producing units as in Bradford or Washington county in PA or one of those multi-fuel units in Ohio,the well would be payed off in maybe two years. 

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Permalink Reply by wyalusing jim on March 17, 2013 at 4:46am

paleface. would it surprise you to know that "one of those high producing units as in Bradford or Washington county in PA," actually pay off in a matter of months?

and as prices rise, the payoff time naturally decreases. it could be as soon as the first or second month, depending.

like i said, run the numbers for some of these wells. it only takes a calculator and readily available data. forget those "royalty calculators", they can be fun to play with, but of little value in the real world.

wj

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Permalink Reply by paleface on March 17, 2013 at 5:42am

 to try and get an idea of the numbers once the well  costs are payed maybe you could help with this example if you had 100 acre's in a 600 acre unit and the unit was producing 15 million a day you would recieve about 16.7% of the gross output of the well at say $3.75 a unit what would that work out to ?

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Permalink Reply by Kathleen on March 17, 2013 at 6:25am

Paleface,
I hope someone answers your post since I keep coming up with ridiculously high numbers on the royalty calculator. The smallest I could get was something like 50 million a year. My first 2 attempts had the working interest owner getting billions :0)

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Permalink Reply by Tom R on March 17, 2013 at 6:52am

A fast calculation using paleface's numbers gives a gross annual income for the unit of $20,531,250. So 16.7% of that would be roughly $3.43 million. I don't have any idea of the ins and outs of working interest calculations, but would guess the 7/8 means it would be down to $3 million. Again guessing, but would assume from that would be taken a proportionate share of operating expenses, taxes, etc. Still a pretty staggering sum!

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Permalink Reply by wyalusing jim on March 17, 2013 at 7:16am

yup, there are costs involved too. working interest owners dont get a free ride, but you folks are absolutely correct in the use of the term, "staggering sum".

now, for palefaces original premise about a "good well in bradford county...."

not in bradford, but in the next county over, there are wells producing as much as 5 bcf in a little over 200 days.

do the math on that one.

and then...recalculate at $5, or $6 gas. and then....multiply times 6 or 8 or even more wells in a unit.

after you rub your eyes and redo the figures a dozen times, you will begin to appreciate the nature of a shale play and the value of your mineral resources.  small wonder the industry goes to the lengths it does to lease, and even smaller wonder why they never renegotiate a royalty % once they have you at 1/8 or 15%.

how many folks still want a higher bonus vs. a higher royalty % now?

wj

Permalink Reply by Kathleen on March 17, 2013 at 8:03am

Than add the 12.5 royalty

Permalink Reply by paleface on March 17, 2013 at 9:46am

 If you plug the same numbers in the royalty calculator its close to 47 thousand a month? Maybe the people that hold out are smarter than us.

Permalink Reply by Joseph-Ohio on July 7, 2013 at 10:31am

The post seems to have been hi-jacked.

 

Back to the point:

 

Mis-applying rules developed for vertical wells to long horizontal bore Utica era wells to enable inclusion of lands without negotiation / re-negotiation is unfair to landowners and should be dis-allowed.

Landowners in Pennsylvania are experiencing similar goings-on and taking steps to contact their Governor to solicit his veto of a Bill presented him for signing into law.

 

Hope it doesn't get that far here in Ohio.

 

All IMHO.

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