North Township Production Numbers

Okay folks, I promised production numbers which are provided below. However, I feel compelled to also provide my personal perspective on the production numbers. Many folks have spent a lot of time trying to estimate their royalty amounts. I never did because I thought that was a futile effort, the reason being that all wells are not created equal. I am now drawing monthly royalties from 5 well's. The production variance among these welds is as much as to 200 percent. There are also other factors that must be considered as follows:

1. Is the land fully developed? By this I mean the land in the drilling unit needs to be basically in a rectangular shape with laterals spaced between 400 and 500 feet apart. All my land is not in a drilling currently. The irregular portions were stripped off and traded to another oil and gas company. The numbers below are for a rectangular portion of my land fully developed.

2. The market prices of the hydrocarbons obviously significantly impacts the royalty received. Also, the market price of natural gas liquids is dependent upon the BTU content. Some of the NGL extracted from by wells had a high enough BTU content to command crude oil prices.

3. The Lease terms you negotiated is the most significant factor. Is your royalty gross or net? Mine is gross.

For all the above reasons, I think it improper for me to provide you royalty income per acre. Instead, the number I will provide is $37.11, which is the per acre per 1% royalty I am receiving. Thus, if I had agreed to a 1/8 royalty, I would be receiving $406.87 per acre per month. While the projected decline curve is significant after 2 years, the wells should be in production for some time.

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Replies to This Discussion

Permalink Reply by Al Cramblett on February 19, 2014 at 10:04am

Booger, thanks for providing a reply.  I would have had to go to my files to find the answer!

Permalink Reply by Dennis on February 20, 2014 at 5:23am

Thanks to both of you. Al, it is great to see your willingness to share the information in a way that is permissable with the group. I hope that attitude is adopted on a wider scale. This is a long term proposition and education by actual experience rather than speculation or hearsay is very helpful. Thanks again! 

Permalink Reply by Philip Brutz on July 17, 2014 at 5:16am

Al, what has the decline rate been so far?

Permalink Reply by Al Cramblett on July 17, 2014 at 5:23am

After the variability of the first three months, the last four months have been pretty much straight line. There has been no noticeable decline in the production rate primarily because Atlas installed plunger pumps to stabilize the production.

Permalink Reply by Philip Brutz on July 17, 2014 at 5:27am

How do your actual royalty checks compare to Boogers estimate for your well?

http://gomarcellusshale.com/forum/topics/odnr-releases-latest-produ...

Permalink Reply by Al Cramblett on July 17, 2014 at 6:57am

Philip, thanks for bringing the thread you mentioned above to my attention. I was somewhat shocked about the discussion of the impact of NGL as my experience has been different. I'm getting close to oil prices for my NGL due to the BTU content.

In regard to your question, my reply is location, location, location. As I reported earlier in this thread, during the first three months of production I received $37.11 per acre per percent of royalty. For the last four months the figure is $25.30 per acre per 1% of royalty. I'll let you run the numbers to answer your own question using the figures just quoted.

Permalink Reply by Booger on July 18, 2014 at 4:09am

price for gas must be a huge range.....dry vs. NGLs.....high BTU vs. low BTU........... it is hard to translate the production (as reported) to $$..........even with AL's information on royalty amounts, all of the NG is reported in MCF.....even if all of the NG was liquid - we do not know how the bbl of liquid is converted to MCF for reporting purposes.....and even if we did, we do not know how much of the NG is dry gas vs. liquid.

Permalink Reply by Al Cramblett on July 18, 2014 at 4:34am

Booger, your comment is correct in terms of the data available from ODNR. However, I receive approximately 16 pages of production data from Atlas every month which provides the detail for NG, NGL, and oil production and revenue received for that production. It appears that all oil and gas companies are not so forthcoming and are even ripping off some royalty owners. I provided the cost data which I think is the relevant issue and will not respond to any request to break down the revenue into the three groups mentioned above.

Permalink Reply by Philip Brutz on July 18, 2014 at 4:35am

Thank you Al.

Permalink Reply by Booger on July 18, 2014 at 6:17am

understood Al.........we appreciate the info you give.........thanks and congrats.

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