Let's Get Real - How Much Might I Make???

Hi! Newbie here. I have five acres near Senecaville. Lease is signed, up front payments have been received, and the rig is going up as we speak. Here's what I'm wondering... I've looked at the "royalty calculators" and all that kind of stuff. I know my royalty rate is 20 percent, and that the wells in the area seem to be quite successful. (The monster in Monroe County isn't far away.) Does anyone know how much I might ACTUALLY receive in the first year? Does ANYONE have an actual royalty check in their hand? They're saying these are great wells, wet gases, even good amounts of crude. WHAT DOES THAT MEAN TO A GUY WITH FIVE ACRES IN REAL TERMS? Someone told me that I might make $300,000 in the first year. Not buying that. Some things I've read here say I'll make sixty bucks an acre. The guy from Antero told me to expect "$31,300 per year over the average life of the well, 20 to 40 years, but frontloaded" WHAT IS THE TRUTH? Any insights would be great, particularly from someone who has ACTUALLY RECEIVED a royalty check. Thanks!

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Permalink Reply by Dave on October 8, 2013 at 6:45pm

5 to 10 dollars per acre per day seems to be a good guess.  It depends a lot on the price of NG and how the well produces.  The amount of gas varies quite a bit.  Some wells are big producers others are not.

Permalink Reply by Paul Nickels on October 8, 2013 at 9:43pm

I hear numbers like that, Dave, but that doesn't come close to what was projected to me by the leasing agent - which of course means nothng :-)  What I'm looking for is to hear from someone who has actually RECEIVED a royalty check on a producing well in the area. Certainly they are all different, and maybe mine will spew light sweet crude for a month or be a dud, but I'm just wondering what the typical landowner who has actually gotten through production and the delay of 180 days has actually gotten!

Permalink Reply by Dave on October 9, 2013 at 3:48am

I work with the public.  People tell me what they are getting.  I also have several neighbors getting checks.  You really can't tell what you are going to get until your well is hooked up and producing.  Hang in there it will eventually happen.  Theres a discussion in the Bradford county section where people talk about how much they are getting.

Permalink Reply by Paul Nickels on October 9, 2013 at 9:27am

You are correct, sir. For all I know, I could be the first "dry hole" in Noble County!

Permalink Reply by Trapper on October 10, 2013 at 12:38pm
Dave:
Does the 5-10$/day estimate involve any oil or liquids? Thanks.
Permalink Reply by evan on October 8, 2013 at 9:24pm

The company who your leased with means a lot also believe it or not.. Senecaville Im guessing Carizzo or Antero 

Permalink Reply by Paul Nickels on October 8, 2013 at 9:41pm

Antero, Evan. They seem to be doing pretty well... The company I actually signed the lease with was Turner Oil & Gas, who I believe was acting simply as the leasing agent for Antero.

Permalink Reply by evan on October 8, 2013 at 9:53pm

Yeah I think Antero is a good company and they have had a ton of success ,just be thankful your signed with a company with a bad name like Chesapeake.  

Permalink Reply by bo boboski on October 9, 2013 at 5:06am

Don't think anyone in Guernsey/Monroe/noble has got a royalty check yet, but soon. Those in the Sanford well ,just south of Pleasant city have gotten checks, but that well is choked back cause the pipeline they are hooked up to is small.  Antero released PEAK rate #s for their wells near you that would get you about $25,000. per month per month,per acre. But those were peak rates.Dont know if they will be able to hook up & sell everything coming out of those wells yet either. The size of the unit matters bigtime. Hopefully people wont clam up when they do start getting royalty checks, but by Jan. when the state requires all well prod. #s to be reported, we will be able to figure it up ourselves with all the info posted by ODNR.  If I were you, though, I'd be looking to retire soon even with only 5 acres!

Permalink Reply by Paul Nickels on October 9, 2013 at 9:26am

Now THAT is music to my ears, Bo! My best guess is that the very first year, at least, will be very good, particularly if it is indeed a "wet gas" well. And simultaneous to the rig going in, they are SCRAMBLING on the pipeline activity, and of course the processing plant is nearly finished over in Summerfield. Maybe, just maybe, the pipeline and the well that will frack my acreage will come together at the same time, and there will be no capping. Read in the newspaper today that gas prices are projected to rise this winter, which would be another good stroke of fortune and make lt less likely that they'd hold back production. I'm thinking Anterao, going into a public stock offering, would want to show as much capacity - and income - as possible!

Permalink Reply by mark on October 9, 2013 at 10:16am

 mornin paul there are a lot of variables involved  I pray that they have pipelines in place so you won't be HBP I also have heard $5-$10 per acre per day per leg hopefully you have full unitization of your acres in the production unit which really means alot for how many legs are they drilling off the well ? very happy for you exciting time isn't it ? I hope the plat map for your area looks like a d@#$%^ octopus !!!!  we have property in beaver county PA which range says is super rich but they are dragging there feet here i think they ran out of money!! we'll see best of luck to you   mark

Permalink Reply by Mark Allen on October 10, 2013 at 6:47pm

real numbers are coming out of Carroll and Harrison on a monthly basis, in form of royalty checks.  Thus far we are seeing higher values than we predicted.

 

In 2009 a wise man said, over a 5 year period it would average $316 per acre per month and if we could predict the future production to last 25 years we would see the decline curve dip to a 25 year average of $180.00 per acre per month.

Currently recovery is about 15%, we see this increasing while the blended price on spot market is $30.00 BOE., this also should increase as each processor comes online and rail economics get plugged in.

payments to lessor on a 15% gross royalty of our clients, are actually $389 per acre per month...and remember this is also per well.  So if your unit has 6 wells, then times it by 6. 

Caution here, as the high is on the frontside, with a steep decline. 1ST THREE years hire an accountant, prep for taxes, gift some to family and good luck in managing.

Old Proverb; A fool and is money are soon departed.

the overall market in the Utica is as good as it is anywhere. the investment opps based on returns is rated at the top.

 

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