There is quite a few royalty calculators available, here's one that I've played with.
Ok let me ask this. If I understand correctly "Initial Production" is the result of the very first days of production. Then, naturally the decline begins.
So why show an annual result for the Initial Production at all? All calcs that I've seen do this including Penn State's. I think it just confuses things.
For instance, plug in some numbers on Penn State and I get a "First Days production x 365 days= $150K" Then a "First YEAR Royalty of like $48 grand. So what happened to the $150?
Am I getting $150 in the first year or the $48? I'm just confused as to why all of these calculators include this IP annualized figure and then show a much lower first year number.
Or is IP x 365 considered year 1, and First Year is really the second full year?
Keep in mind that you will probably use a unit size of 640 acres or more. However Keep in mind that the operator will probably drill 6 or more wells on that unit. You would get a piece of each well on the unit. Someone on this board said as a rule of thumb you could count on between $5 and $10 per acre per day for 10 years on a decent Marcellus well.