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Permalink Reply by 0i7okn54zwbdo on October 30, 2013 at 7:08am

Tons of variables to consider.  Price per MCF of nat gas, price per bbl of oil or condensate and price per bbl of NGLs are all different, and each needs to be taken individually to get the entire picture.  NGLs are subject to processing and in the Utica the facilities are nowhere near full capacity yet.  That means some companies are going with full ethane rejection (which means leaving it in the stream of gas and not separating it out) and that can cause royalties to plunge.  As for throwing NG away, that's happening a lot in the Bakken due to a lack of infrastructure to get the NG to market.  That's less of a concern here in the Appalachian Basin where there has been NG production for decades and there is better pipeline takeaway for the gas.  There's no easy answer to your question because there are far too many externalities to examine.

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Permalink Reply by TM on October 30, 2013 at 7:13am

If a well produces all 3 types you get paid for each. You would get paid oil price, gas price, or NGL prices per barrel. Your royalty is derived from your amount of acres in the unit divided by the unit size x your royalty percentage on your lease. The number you get will then be your decimal interest in the unit.

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Permalink Reply by Joseph-Ohio on October 30, 2013 at 8:24am

Shouldn't forget the now famous 'Market Enhancement Clause' either.

Also an important and operative word in your post is the word 'exactly'.

'Exactly' how royalty calculations will be performed ( IMHO ) would be very much 'lease dependent'.

As another has written above ( and it seems to me also ) there are 'Tons of variables to consider'.

Maybe as infrastructure develops / comes on line, royalty calculation methods, especially for NGLs, may even change - don't know - but it seems plausible.

Good luck in your endeavors.

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Permalink Reply by Ragnars Repo on October 30, 2013 at 11:08pm

How exactly does a rainbow work? How exactly does a posi track on a 59' Plymouth work? It just does....

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Permalink Reply by LewisClarku on November 6, 2013 at 9:34pm

As I understand one has to be in a drilling unit to receive royalties...the particular lease included in the drilling unit will pay royalties based on the number of producing well(s) in that unit. Can someone explain to me....in the situation where a drill pad is placed on one's land.....is the land owner entitled to royalties that come only from the well heads originating from that pad site for which these horizontal wells are assigned to the leasing unit or is the land owner paid royalties for all O & G produced from the well heads regardless if
the horizontal wells are assigned to the drilling unit or not?

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