Replies to This Discussion

Permalink Reply by Happy for hardworking Farmers on August 24, 2012 at 10:58am

Hi JD, Most laterals are coming in at about a mile in length. Some are longer. Enclosed is an example. If you're handy, unlike me, I think you can pull them off the ODNR website. This example has a width of slightly over 1000 ft... and a total area of 153 acres.

Attachments:

• Utica Production Unit.pdf, 1.2 MB

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Permalink Reply by Kathleen on August 24, 2012 at 12:58pm

That's the first unit drawing I've seen where is says exactly how much mineral acres the owner has in the unit. I thought maybe it was a well drilled in '11 but this drawing was submitted Feb of this year. Interesting.

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Permalink Reply by jnm on August 24, 2012 at 2:17pm

this unit is what is submitted for the permit. I'm sure there is a unit of who will share the royalties that is a lot larger than this. These units are filed in the county recorders office.

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Permalink Reply by Kathleen on August 24, 2012 at 2:36pm

Agreed but I wish the odnr site unit drawings filed had this info added, since it would make life easier than going to the recorders office.

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Permalink Reply by Happy for hardworking Farmers on August 24, 2012 at 3:05pm

Good point, I guess it depends on if they are part of a land group or not. I guess they wouldn't necessarily need to disclose that for the sake of obtaining a permit?

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Permalink Reply by Kathleen on August 24, 2012 at 1:02pm

http://www.ohiodnr.com/oil/shale/tabid/23174/Default.aspx. Here's where you look up the wells, drawing, etc.. Please read the directions on how to use this site. Some people can explain it but I can't. I hate this site but this is where the info is. Once you do it a few times it does seem easier.

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Permalink Reply by JD Stillwater on August 26, 2012 at 9:03am

Thanks to all.  Helpful.  Kathleen, your link helped me find the link below, which, as you suggest is a pain to use. If you are used to working with Excel, click on the Excel link as soon as you see it.  MUCH easier to search and use, and you can download the entire database.  Start by clicking Menu, then County Engineer's List; don't use the filters at all, then click Report, and then Excel.  

http://www2.dnr.state.oh.us/mineral/OHRbdmsOnline/WebReportAccordio...

So, I took the 2011 production numbers from ODNR for each of three wells in Carroll county, and put them together with the DU_acres number for each well from the county engineers database, and assumed $3/Mcf (gas) and $85/barrel for liquids, and I get an average royalty of about $3,700 per acre per year at 12.5%.  Is that correct?  If you have a 500 acre farm, that approaches 2 million a year in royalties.  That can't be right.  What am I missing? 

btw, the same calculation for the Buell well in Harrison County comes out to 3.6 million PER YEAR for a 500 acre farm, just in royalties.  Gotta be wrong.  

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Permalink Reply by Kathleen on August 26, 2012 at 9:32am

Someone recently went through some well numbers and average prices so I'll look for that link for you. It seems the number is estimated at 100-1000 by different people but this person came up with around 10 thousand a year per acre. I think you are over pricing the liquids but even if you halve that it's still high (hope your right :0) ). I will go look for that link in a bit. On a side note I've turned into an iPad junky and almost never pull out the laptop which has the better programs to use.

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Permalink Reply by jnm on August 26, 2012 at 1:07pm

If you are counting on 10,000 per acre per year, you will probably be extremely disappointed

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Permalink Reply by Kathleen on August 26, 2012 at 1:34pm

I think with the numbers they are using and the 2 people that posted the numbers on their royality checks from caroll county wells I think the 1st year you would than time will tell. I personnelly do not expect that year In and year out.

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Permalink Reply by Kathleen on August 26, 2012 at 9:47am

Here's the thread link. http://gomarcellusshale.com/forum/topics/royalty-monies?groupUrl=ca...
If you use the search box in the upper right hand corner on this site you will find more. 2 weeks back or so there was a very detailed discussion on this if I remember right with a member called jack straw providing a ton of info. I think I got the member name right.

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Permalink Reply by JD Stillwater on August 28, 2012 at 1:05pm

Thank you Kathleen.  That helped.  It's pretty complicated for a newb like me, but I think I have it.   You only get royalties for your acreage that is IN THE UNIT, which is surveyed on a map.  In a large unit like the new 1,280 acre units, every acre in the unit gets royalties, even if the drill is not under my land.  If the company drills all six laterals at once, every owner gets huge checks until the well is dry.  If they drill the laterals one at a time, waiting until the previous one starts to slack off, then every owner in the unit gets smaller checks, but they get them over a much longer period of time.  In the end, it's the same total money, assuming prices don't change.  

The companies prefer to drill one lateral at a time, because they can show the futures markets that the product is there, and that increases prices.  Basically, my numbers were correct, but the money will be spread over a lot more years, with only about 1/6th of my numbers coming in each year because the royalties from one lateral are spread over a six-lateral unit.  Later, a different lateral will be spread over the whole unit, etc.  So I get about $7,000/acre/year in a 200-acre, 1-lateral unit, over the life of the well.  In a 1,280 acre unit, $1,200/acre/year for a longer time, unless they drill all six laterals at once, then more like $7,000/acre/yr. 

If someone out there thinks I'm wrong, please pipe up; I'd love to be corrected if I'm off here.  If no one does, I'll consider my question answered.  Thanks everyone!

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