Replies to This Discussion

Permalink Reply by The_Baron on February 17, 2009 at 4:42

Unfortunaly prices are closer to $3 at the wellhead now.

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Permalink Reply by Eric Camp on February 17, 2009 at 4:46

Ok... So $1,800,000... In a month. I know these wells are expensive and have steep decline curves but operators are still making a killing - even at $3 gas.

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Permalink Reply by Todd M. Baker on February 17, 2009 at 7:46

If the average royalty unit the unit is 20%, now the operator gets 80% or $1,440,000.00. Now you have to substract an estimated 7% (only guestimate of LA gross production taxes). That leaves, before operating expenses, $1,339,200.00.

No, nothing to sneeze at and by all rights a good well. Only time will tell if a very good well.

If it cost $9,000,000.00 to drill & complete, that is an approximate return of investment of 7 months, no decline taken into account. Nor are the leasehold costs accounted for.

TMB

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Permalink Reply by The_Baron on February 17, 2009 at 7:49

Don't forget the monthly operating expenses.

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Permalink Reply by the realist on February 17, 2009 at 12:00

I agree Todd. Especially when you are talking about $5000 +/- per acre for the leasehold acquisition, which would be in the $3Million range on a 600 acre unit. So, you have $12 million invested, not counting other costs, such as landmen expense, pipelines, surface damages, etc. It would have to be a huge barnburner producing for such rate a long time with the price of gas currently, not to mention the price at the wellhead could be significantly less than that of the market price.

At some point, we have to think, is it worth it to lease and get a well, or do we simply sit and wait and HOPE the market comes back. I don't see the big lease dollars being thrown around in a widespread lease propect happening for a long time, if ever.

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Permalink Reply by charrise on February 19, 2009 at 20:07

according to a published table, if a well is producingfive million cfd at $6, the royalty(one fourth) would be $351 a month per acre, likewise if it were ten millioncfd, the royalty would be $703 per month per acre 0d

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Permalink Reply by Todd M. Baker on February 20, 2009 at 2:00

Charrise:

That is correct, less applicable taxes. Be careful with that calculator though. Unfortunately, we won't be seeing $6.00 gas again for sometime and a well never makes more tomorrow than it did today. Just being conservative.

TMB

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Permalink Reply by BirdDawg, plain ole' idiot on February 21, 2009 at 11:17

Todd,
Since you know all about NG, when will we be seeing that price again?
I, for one, am glad we have another person on this site who knows everything.
Thanks to you for being here, we will now know everything that is going to happen in the future. What do your tea leaves have to say about my sorry old ass?
Good grief Charlie Brown.

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Permalink Reply by Dion Warr, CPL on February 17, 2009 at 5:29

Jon:

This averages close to 20 million cubic feet per day. Nothing to sneeze at, by any means.

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Permalink Reply by Jon, landowner on February 17, 2009 at 5:42

sorry-- you are right---A good cotton valley will produce about 4 million per day the first mo

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Permalink Reply by Jay Murrell on February 17, 2009 at 12:31

I don't know where you people get this volume information for the CV, but some of what's being posted here is just plain BS

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Permalink Reply by Gone Fishin on February 17, 2009 at 12:43

anyone heard of the #'s from the mitchell trust well in the ferguson survey shelby co. I heard it is a monster for a vertical well. api# 41931360

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