ROYALTIES

IF I OWN THE LAND AND MINERAL RIGHTS WHERE THEY PUT THE PAD DO I GET ROYALTIES FROM EACH ADDITIONAL WELL DRILLED?

 

 

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Permalink Reply by JK on February 6, 2012 at 8:28am

YES! 

Do you have a lease signed??

Permalink Reply by craig on February 6, 2012 at 8:33am

However each horizontal may have differing amounts of your acreage in it's unit.....depending on how they drill, your lease and how they unitize. 

Permalink Reply by Billy Park Whyde on February 6, 2012 at 9:23am

The royality that a well or wells that  are drilled in the drilled unit of land are divided between the landowners that have land in the drilling unit. The division is based upon the amount of land each has contributed to that unit. However it is possible that different royalty percentages may very as to how individual leases were worded. A old lease may limit a land owner in the unit to the old 12.5% or 1/8th where as a more modern lease might give a participating land owner 17% or better. A hyopthetical here using the oil gas calculator. two members each have say 50 acres in the 640 acre unit, one has a 12.5% the other has a 17% difference in the royalty based upon say 800/bbl a day at $100/bbl= 12.5%  $285,156 a year vs 17% $387,812

Permalink Reply by mike4t on February 6, 2012 at 1:07pm

I don't know for sure, but I would expect the well pad to be in the center, NNW to SSE, of the drilling unit.... therefore I would think that you would get royalties as a percentage of your acreage compared to the entire unit regardless of how many wells they drill.

 

Hopefully for you, they will drill the max amount of wells they can on your pad and get LOTS of gas and oil

Permalink Reply by mike4t on February 6, 2012 at 1:52pm

Sure, it might be closer to one end or side than the other, but I would expect all the wells drilled from that pad would be for that unit only, whether the unit is 640, 960, or 1280 acres

Permalink Reply by Billy Park Whyde on February 6, 2012 at 4:59pm

correct me if I am wrong in this statement 

The royality that a well or wells that  are drilled in the drilled unit of land are divided between the landowners that have land in the drilling unit. The division is based upon the amount of land each has contributed to that unit. However it is possible that different royalty percentages may very as to how individual leases were worded. A old lease may limit a land owner in the unit to the old 12.5% or 1/8th where as a more modern lease might give a participating land owner 17% or better. A hyopthetical here using the oil gas calculator. two members each have say 50 acres in the 640 acre unit, one has a 12.5% the other has a 17% difference in the royalty based upon say 800/bbl a day at $100/bbl= 12.5%  $285,156 a year vs 17% $387,812

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on February 6, 2012 at 5:13pm

Boy...do those figures sound good!  esp. per year.   I like your posts Billy.  Of course I am waiting on Natural Gas not oil , then again, maybe they will discover oil also.

Permalink Reply by craig on February 6, 2012 at 6:14pm

Real world numbers for dry gas for Oct 2011:

891 acre unit - one lateral only

averaged 4.2 mcf /day sold

12.5% royalty equaled $78/acre per month and that was at a price of $3.69. No deductions or taxes taken out.  

Permalink Reply by Billy Park Whyde on February 6, 2012 at 6:24pm

thanks craig I use oil figures due to my location but from what you showed  and what gas prices are now I hope gas prices head up. By the way Europe is freezing their A@$@ off Russia said they could not meet demand.

Permalink Reply by Carol on February 7, 2012 at 8:17am

I am in a 630+ acre unit of 8 wells with only 3 producing and paying at this time.  The next 5 wells are in production and I expect to see 15 days of royalties on those wells this month.  My $ per acre, per well, per month should increase because these 5 wells have been reported to be producing at 5.5 mmcf per day.  The other 3 wells are averaging only 2.8 mmcf per day.  Here's an example - last month's royalty check, each of the 3 wells averaged approximately $1800 for me which was equal to about $78 per acre, per well, per month.  I have no deductions and a royalty rate higher than 12.5%. 

Permalink Reply by Carol on February 7, 2012 at 5:17am

My actual royalties have varied between $55 - $80 per acre, per well, per month - Craig's estimate above is very accurate. 

Permalink Reply by Billy Park Whyde on February 7, 2012 at 5:24am

Thanks for sharing Carol mind telling of the set up. Are you into a unit, just a vertical what area in generic terms. 

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