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Permalink Reply by Nancy Mosley on March 16, 2022 at 7:13am

Depends on a lot of things including wording in the lease about deductions, location of wells, quality of what is produced (natural gas, etc),  terms that the producer has with whomever is buying the products, hedging, etc. Also, of course, in your total interest in the unit.

I am not qualified to make calculations even with that information, but I am aware that many factors go into the monthly $ amount of a royalty payment.

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Permalink Reply by INVICTUS on March 17, 2022 at 3:35am

First, unless you have a very well written lease that precludes ANY production costs, you should not expect to be able to apply simple mathematics (Ie, Multiply .18 X whatever dollar gross value you believe your interest allows per month of production) to your royalty statements and see clear mathematice evidence of ongoing cash flows.

The value of the product is what the producers say it is on your monthly statement. 

My experience? I'm a Pad owner with history in Cheasapeake, Total, and now Encino. Nearly 100 months of production.

Unless you sell your interest, you have a lifetime business partner. Best advice is to treat it as a business. And hold on for the ride.

And don't quit your daytime job. I am not kidding!!

Best advice is to use any monies to pay the taxes (likely schedule E),  then set it aside and wait. Six months. Do not spend it. Pretend it isn't there. Wait another six months, then make a decision on spending the loot, probably retiring any personal debt.

More info than asked for, best of luck with the venture!

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