Replies to This Discussion

Permalink Reply by Erin Carpenter on March 27, 2011 at 10:00am

Royalties depend on several factors: what the mcf is at the wellhead, the total number of acres in the production unit, how many acres you have in the unit, the current market price of natural gas, and the percentage of royalties negotiated in your lease. 

Here is a link to the DEP website where you can see the recent well production figures for Bradford county.

This will help in calculating potential royalties.

https://www.paoilandgasreporting.state.pa.us/publicreports/Modules/...

 

Royalties also depend on the total number of acres in a production unit.  I know we are listed in a unit that hasn't started producing yet but the number of acres in the entire unit is 640 of which 80 acres are ours.

 

Here is a royalty calculator that you can use to try and guess what you might get:

http://extension.psu.edu/naturalgas/royalty-calculators/pennstate-r... 

 

I also read somewhere that Chesapeake says that the average royalty is $10 per acre per day for 10 years.

Permalink Reply by Frank Walker on March 30, 2011 at 3:51pm

Pam

You didn't provide your (general) location within Bradford County.  Bradford County is nearly as large as Rhode Island.  So I am very limited in my ability to answer you.

 

Also, you did not provide degree of development within your DU (drilling unit).  This forces me even further to generalize:

 

For a DU of roughly a square mile, or 640 acres, said DU containing a full complement of eight (8) wells, all operating for the entire month and

 

Provided your lease specifies NO deductions of any nature and

 

At your royalty fraction of 20% and at a sale price of approximately $4.55

 

You can figure as an extremely rough "rule of thumb" that you will receive

 

$1000 per acre in the DU per month.

 

The above estimate applies to initial production volumes.  Those volumes can be anticipated to 

settle down with the passage of time.  Also, please keep in mind not all of your land will necessarily fall within the same DU.  So your monthly royalty income might start out lower, and then escalate when another DU commences production.

 

Also please be respectful this is all so generalized and ball park.  Within my current DU, of the eight wells, some have monthly production volumes twice that of other wells within the very same unit!  So trying to provide the estimate you are requesting is akin to nailing jello to the wall.  There are just SO many variables.

 

Finally, the number I used of $4.55 is very close to the sale price on my most recent statement, which was for January.  Because $4.55 is above spot, I suspect I am benefiting from a contract price.  And of course the $4.55 price is subject to change at ANY time, and will vary depending on the company that is selling your gas.

 

While I hope this is helpful, please bear in mind your outcome could vary.  You might easily receive more money per acre, or less money per acre, than my very rough "back of the napkin" estimate suggests.

Permalink Reply by Pam S on March 30, 2011 at 4:02pm

thank you for the ballpark. I know there are too many variables to give anything else but an extremely rough estimate. That's all I was looking for. I also wasn't aware of how big Bradford County is. The size of Rhode Island- WOW! Thanks so much for the information

Permalink Reply by Frank Walker on March 30, 2011 at 4:30pm

Pam

 

No problemo.  Happy to be of service.

 

Bradford County is actually a tad bit smaller than Rhode Island, but not by much.  Bradford County is second largest county in the Commonwealth.

 

Lycoming County, just to our south, is very close to the size of Rhode Island.  Lycoming is the largest PA county in terms of land area.

 

Rhode Island, BTW, contains five counties and a population vastly greater than ours here in Bradford County.

Permalink Reply by Barbara on March 30, 2011 at 6:28pm

what did i read today.....bradford has 16,000+ people?  something like that.  we couldn't even BE five counties!!  heehee

Permalink Reply by Barbara on March 30, 2011 at 7:02pm

oops.............i did get the '6' right at least...............it is 62,000+, down a little bit from 2000's tally.  sorry about that..........short term memory is just so much fun to live without.  and reason, as well!!!

Permalink Reply by Barbara on March 30, 2011 at 8:02pm

maybe a LOT LOW!!!!!!

Permalink Reply by Frank Walker on March 30, 2011 at 8:47pm

My situation involves a roughly square mile DU with a single, quite large, pad.  There are eight wells drilled into and emanating from that single pad.  This is pretty much the standard all around the region where I live here in Bradford County.  It takes that many wells completely to drain the square mile.  All eight wells are producing now.  It's rather quiet.  They just sit there quietly earning everyone a fortune.  You can't beat it with a big stick.

 

In different regions, with different shale characteristics, it might require more, or fewer (unlikely) wells completely to drain the DU.  Everything depends on shale density and susceptibility to fracking.

 

I'm unaware of DUs with more than one pad.  The trend seems to be toward DUs even larger than the customary (for me) square mile, with the entirety of the DU STILL accessed from a single pad location, by virtue of longer laterals.  

Permalink Reply by Frank Walker on March 30, 2011 at 9:38pm

Yes, it took over a year.  I thought they would never finish.  The flaring off of the wells was spectacular, especially at night.  It was awe inspiring for a novice like me.  Really neat stuff.  Loud and proud.  Visceral.  Got you in the gut.  It made me feel as if America might finally be back . . until the libs shut us down, anyway.

 

In terms of the company, I can say this:

 

It was NOT Chesapeake.   'Nuff said on that except . . 

 

What you are reporting about Chesapeake's modus operandi does not come as a surprise.

Permalink Reply by Pam S on March 30, 2011 at 7:22pm

FYI- I'm in Burlington Township about a mile from Chief's Black well

Permalink Reply by Sarah A. Conchewski on April 26, 2011 at 11:13am

Does anyone have any info on what is being paid for leases in ridgebury twshp.  I've had an offer of 4,000 per acre and 16% royalty. Just wondering if that is a fair price??

Permalink Reply by Barbara on April 26, 2011 at 12:13pm

sure beats anything i know of around me in smithfield twnshp!!!!  what company?

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