Replies to This Discussion

Permalink Reply by William Ladd on September 13, 2010 at 12:53pm

This is where I got some of my information Josie.

I used to do spreadsheet work for a personal care home. Like figuring out the income from residents and how much to pay the various workers, paying the utilities, insurance, buying food and so on.

Amazing how these spreadsheets work. Just one value change can change the entire result.

Bill L.
aka Bummy

Permalink Reply by Lynn Wigglesworth on September 13, 2010 at 3:04pm

I don't think that's right. Are you assuming that the landowner owns all the land in the unit? The 5mmcf would, I think, be for each lateral. I also think the price is in mcf (thousand cubic feet) and the production is in mmcf (million cubic feet), so a well producing 5mmcf at $4mcf would bring in $20,000 per day, and the landowner's share would be $3000/day (15%). I'm math challenged, but does that sound right to anyone?

Permalink Reply by PA roughneck on September 14, 2010 at 1:32am

Lynn, you are correct. Production is in mmcf and price is mcf. The 5mmcf is about right for production from one lateral (well). So a 640 acre unit with 6 horizontal wells at 5mmcf/d and 15% royalty would bring in something like $28 a day per acre in the unit. If the unit was owned by a single landowner his monthly royalty check would be around $537,000 before any deductions.

Permalink Reply by Keith Mauck (Site Publisher) on September 15, 2010 at 3:12am

You can also use this one as well...http://www.shalebiz.com/pages.php?page=6

Permalink Reply by Paul D Ettari on September 15, 2010 at 4:48am

I found this to be useful
http://geology.com/royalty/

Permalink Reply by Barbara Richard on September 15, 2010 at 9:46am

How many acres?

Permalink Reply by William Ladd on September 15, 2010 at 12:09pm

I discovered in my original posting that I inadvertantly mis read the price per gas at the well head. It should be $4.00 per mcf and not mmcf as I posted. As a result my calculations were wrong. I also did not consider the size of my own acreage.

Bill L.
aka Bummy

Permalink Reply by Ann Ticopa on September 15, 2010 at 12:49pm

Bill, something else to incorporate in your calculations is the decline rate. A well starting out at 5 Mcf would be down to approx 1.5 Mcf at the end of the first year.
http://www.thefriendsvillegroup.org/declinecurve_range.pdf

Permalink Reply by William Ladd on September 15, 2010 at 1:04pm

Thank you Ann. I did not not have this information before. Marcellus seems to level out at a little higher level then the others as time goes by according to the graph presented.. I will have to take an average over a period of time to get some sort of accuracy.

Bill L.
aka Bummy