ROYALTY VS. BONUS MONEY

 

When we were getting ready to sign our lease 2/12 years ago, the landman (among others including this site) told us that "royalties will be a LOT more than the bonus paid"

 

OK, if you say so, I'll believe you, I have no way of knowing....

 

Also, at that time, doing due diligent research (on this site among others), it was said that 1/2 of all the royalties would come in the first 5 years, the rest would come in the following 40 years or so.

 

My question: if you are getting royalties, will your 5 year payment or estimated payments exceed your bonus payment/per acre? When did it exceed your bonus? 1 year, 2 years 4 years? Will it ever?

 

If not, did they "overpay" us on the bonus? Or are the wells not producing the way they thought? Are they choked off that much? Or are they stealing that much from you? All of the above?

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Mike MurphyPermalink Reply by Mike Murphy on August 3, 2015 at 6:09am

if  you were payed 3000 an acre bonus and now are drilled and receiving 300 a month royalties an acre it would take 10 months

Permalink Reply by mike4t on August 3, 2015 at 6:28am

Right, but have you been getting $300/month/acre for the last 10 months?

 

So many on here are saying they're getting $2/acre or that they are getting nothing because they were overpaid in past months

 

I would like to hear actual royalty receivers say how their payments have compared to their bonus in total 

Permalink Reply by Gary Keeney on August 3, 2015 at 7:10am

Everyone has always said the royalties are the important part, but I have been tied up and shut in for 4 years on wells that have not been completed.  i think you need to look at the whole lease including, bonus, shut in protection, Pugh clause, and royalty. You can not assume because you have leased anything will happen soon.

Mike MurphyPermalink Reply by Mike Murphy on August 3, 2015 at 9:44am

show me where someone said they were only getting 2 dollars  an acre they have created 550 millionaires in carroll county alone and those people are getting a whole lot more then 2 bucks an acre anybody getting only 2 bucks an acre signed a piss poor lease

Permalink Reply by Tim Tarr on August 4, 2015 at 6:26am
Just keep in mind it takes quite a bit longer at <$3 gas than it does at >$4 also at <$45 oil most NGL's are "given away". I'm in SW Pa royalties now 1/3 of last year. Nothing to do with well decline curve. Everything to do with price decline curve.
Yes our production is choked way back. Last wells on the pipeline before major compressor station.
Permalink Reply by Bill Barnaby on August 4, 2015 at 3:55am

Many variables could go into this, how much bonus you got for example. I have seen the first check be 5x the bonus amount, each person is different but unless you get a horrid well you should be making your bonus back with in the year or two.

Permalink Reply by Frank Walker on August 4, 2015 at 4:06am

I think it depends on whether or not you are counting posthumous royalties.  Speaking only for myself, there is scant little chance royalties will exceed bonus while I am living.  Thereafter?  Well, maybe.  But posting confirmation, if it does happen, will be really tough.  ;-)  

Mike MurphyPermalink Reply by Mike Murphy on August 4, 2015 at 1:30pm

I cant understand why you are trying to compare bonus money with royalties they are both positive things for u and nobody ever said the royalties would exceed the bonus in any certain time  but their are alotta people that have made royalties way past the bonus money  ...........

Permalink Reply by Frank Walker on August 4, 2015 at 11:31pm

Mike

Why trying to compare?  Well, I'm doing that because it is what the OP asked.  I'm responding to the OP's question rather than making an off-topic observation or criticism.  Do you have a problem with that?

Or is it that you somehow believe $3000/acre bonus money is a reasonable bonus?  Just for the record:  it is not . . . at least not where I live.  And when a landowner has received bonus money hugely in excess of your $3000 pittance, it is less likely royalty will exceed bonus during that landowner's life.

Finally, you state many landowners have made royalties way past their bonus money . . . as if that in some manner constitutes "news".  It is not, at least not to me.  But a corollary to your correct observation is that some landowners signed a lease without extracting from their gas company the best bonus possible.  For your information:  not all landowners committed that faux pas.

Permalink Reply by Dave C on August 4, 2015 at 11:29pm
I can only speak for our case but our royalties exceeded our bonus on the acres in a unit after 10 months of royalties. This has been royalties for June 14 to April 15 so gas prices have not been good during almost that entire period. We are in Belmont County and signed May of 2013.
Mike MurphyPermalink Reply by Mike Murphy on August 5, 2015 at 12:12am

THANK YOU  Dave there are alotta mineral owners that have received way past initial bonus money in royalty payments    my 3000 dollar bonus was just being used as an example   and I was not saying anything to do with best or worse lease agreements  I also said SOME I never said All landowners  sorry we woke you up Frank go back to sleep I like them folks that use them big words LOL

Permalink Reply by Frank Walker on August 5, 2015 at 12:21am

Well, Mike, from your mindless prattling it sounds to me as if you're in a state of somnolence 24/7/365.  May pleasant dreams be the only variety you experience.

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