Royalty Amounts to Expect?

Has anyone heard what are reasonable royalty amounts that a person can expect to receive in a years time when drilling & fracking are completed?

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Permalink Reply by SA Frank on July 10, 2011 at 6:39am
Finnbear,  Are these wells conventional wells or shale wells?  Conventional wells are dependent on a lot of things.
Permalink Reply by deutchen on July 10, 2011 at 11:37am

What is the current price / MCF of natural gas?

What would you guess to be the average initial production of a Marcellus well in say Washington, Pa. 

Is there much variation between wells in the same general area since they are tapping into the same formation with the same thickness.
Permalink Reply by Farmhouse on July 11, 2011 at 12:58am

Jim,

What is the difference between market price and/or NYMEX Spot price and "arms length transaction"?

Permalink Reply by Bill anders on July 14, 2011 at 9:53am
with the price where it is right now in Wash, PA it is hovering around $100/$150 dollars Per Acre, Per Well, Per Month.
Permalink Reply by Finnbear on July 11, 2011 at 2:20am
Conventional wells. Shale wells are dependent on a lot of things too.
Permalink Reply by Laura Luchuck on July 11, 2011 at 6:29am
ALOT! Oil and Gas companies are trying to keep it hush hush on the Marcellus wells that are in production while they negotiate leases for the least percentages they can get! I work for an oil and gas company and I've seen the results. Rates in WV are anywhere from 14.5% to 20% Royalties, I wouldn't go for any less.
Permalink Reply by Hunter on July 14, 2011 at 6:47am

Another calculator is on Geology.com website.  No idea how accurate it is though. 

 http://www.geology.com/royalty/



Permalink Reply by Mark on December 8, 2012 at 2:43am

does this sounmd right? please tell me where the math is wrong

If my well reports "Equivalent" 5000bbl/day for daily production

@$90/bbl x 5000bbl/day=$450,000/day gross income for the well

if my pool is 640 acres= $703/acre/day

I own 1 acre in the pool @ 20% gross royalty

1acres x20%x$703=$140/day?????????????

at that production rate?

 

Permalink Reply by Bluflame on December 8, 2012 at 3:10am

Mark,

  The math looks good, but $90/bbl will likely overstate the royalty. You'll need to know the components to get a closer estimate. Best guess today: NG @ $3.70/MCF, Oil @ $87/bbl and NGL's @ $40/bbl.  As I'm sure you know, these prices are a moving (rapidly) target!. 

   "Equivalent" is converted in BTU's and is not necessarily a close approximation of price, especially if NG represents a large component of production.

  Good luck!

BluFlame

Permalink Reply by Mark on December 8, 2012 at 3:25am

Thanks Bluflame,

What's the difference between Condesates and NGL's?

got any Idea how (the processor) tracks the components (from the well head)

Permalink Reply by Bluflame on December 8, 2012 at 3:47am

Mark,

  Each O&G company tends to report production differently. I can't explain why. Generally, "condensate" is oil and NGL's are natural gas liquids. Oil is separated out at the well site. NGL's are separated from the natural gas stream at a processing facility and further broken down into components at a "fractionator". NGL's are the most difficult to price because components will differ at each well. $40/bbl is a decent current guesstimate. Further complicating matters in SE Ohio right now, ethane (~50% of NGL's)( which is further processed in a "cracker" to ethylene, which in turn becomes feedstock for a myriad of chemicals/polymers)  has no way of getting to market. This situation won't be remedied until 2014.

  Confusing? Absolutely. As far as tracking components, it's a matter of "trust them!". The only good news is that the O&G's have the same incentive as landowners to make certain reporting is accurate.

BluFlame

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