Lease Offers in Harrison County

Updated November 8, 2011

This webpage is a little over a year old. During this time frame oil and gas leasing
offers have increased significantly.

As of November 8, 2011 the signing bonus has increased to $5350-$5800 with the royalty percentage at 20 % gross. Leases are being signed by several companies. The best lease terms are being realized by the landowner groups that offer their acreage through a competitive bidding process. I personally believe the money offers will continue to increase with time. The highest offers occur when landowners pool their land into contiguous units.

Presumably, all are aware that Chesapeake recently leveraged 25% of their leaseholds in

Eastern Ohio for $15,000 per acre by forming a JV with an undisclosed oil major.

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Replies to This Discussion

Permalink Reply by Josh on June 2, 2011 at 3:24am

James, I agree i just want to keep putting these numbers out there so others are aware.  I agree as well about no one being left behind, to valuable of resources under us just to walk away from.  Even $3500 an acre is a bargain, but its getting closer to what the real value is.  Still think they can and will do better.

Permalink Reply by william on June 2, 2011 at 4:34am
I find it interesting that the price keeps going up with time. I was offered $500/acre with a 12% royalty last year. Then lo and behold the price went to $1500 6 months ago. Now it is up to $2250 with a 16% royalty. Not sure what I'm going to do just yet but the price certainly hasn't gone the other way.
Permalink Reply by FXEF on June 2, 2011 at 6:17am

william,

The early bird gets the worm, but the second mouse gets the cheese. I might add that the third mouse gets nothing.... so don't wait too long.  

Permalink Reply by Josh on June 4, 2011 at 1:04pm
I just heard that a man in Harrison County Ohio, is receiving $585,000 a month in royalty payments for "his" horizontal well.  Could this be possible?  If anyone else knows anything about this rumor could they please comment.
Permalink Reply by scott jackovitch on June 4, 2011 at 1:15pm

Josh i had a conversation with somone who also made the same claim. I did not know exactly what to believe.  That would have to be the Buell well wouldn't it ? That is the only well in Harrison county that has been put into production so far.  What would that calculate to per acre per month ?

 

Permalink Reply by Josh on June 4, 2011 at 1:52pm
Guessing somewhere around $3000 an acre a month!!!  That would be some nice stimulus money for our economy.  
Permalink Reply by scott jackovitch on June 4, 2011 at 1:55pm

How does this compare to the big oil fields in the US ? Are they recieving this kind of monthly royalties in Texas ?

Permalink Reply by Dan on June 4, 2011 at 9:41pm

The rumors are certainly flying.  It is virtually impossible for one man to be getting $585,000 per month.  With a stretch, I could see a basis for the rumor this way.  Assume a well is initially producing 15MMCF per day, which is a very good flow rate. At the current average wellhead price of $4.12/MCF then that means the well is grossing $61800 per day or $1.8 million per month.  That would be the entire revenue though.  If a royalty owner had a 20% royalty, (assuming their property made up the enitre drilling unit), they would get around $380,000 of that per month. Seeing as how those assumptions of royalty and flow rate are very generous, the rumor mill would seem to be inflating the numbers.

 

If the Buell well is in production, then it is the only one of its type in production in this county, and it would barely have a month's worth of production data available. Plus the minerals for that well are owned by a corporation, not one man.  That all adds up to a grossly exaggerated rumor at best and an outright fabrication at worst.

Permalink Reply by JT on June 4, 2011 at 11:21pm
Those were my thoughts as well Dan.  Not sure how any one person could be receiving that much royalty from the Buell since the plat indicates that all the mineral rights are owned by North American Coal Royalty.  Although the numbers could increase some if oil is also being produced from the well.  
Permalink Reply by Marc on June 5, 2011 at 12:58am

Factor in 1000 barrels of liquids a day (Dan leaves that out, presumably because his calculation was simply illustrative), run it through a royalty calculator, even at $50/barrel (condensate price) and you can see how Dan's $380,000/ month would easily become $585,000/month.

 

Not saying that I think anyone is getting half a million dollars a month, but more because you can't extrapolate out from the first couple months and say "monthly" with these kind of wells and also for the reason stated by JT.

Permalink Reply by scott jackovitch on June 5, 2011 at 1:03am
Does anyone have any info on what the landowners in Texas earn in monthly royalties in the best oil producing areas ?
Permalink Reply by william on June 6, 2011 at 12:31am
Does anyone know the exact date when the Buell well numbers will be made public? I have read on this site that once the information is available then we will have a better grasp on the value of the properties for leasing.

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