Will the amount of wells on a production unit increase your royalties

Need to know if you are paid royalties from each producing well that your property is located within that particular 640 acre unit.

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Permalink Reply by Iris on August 21, 2008 at 3:02
Ok that is clearer I think...thx...
Permalink Reply by Mister Z on August 21, 2008 at 8:22
you will be paid on every mcf that is produced from the 640-ac unit based on your fractional ownership in the unit, whether the gas comes out of 1 well or 8 wells.
Permalink Reply by Mike on August 21, 2008 at 4:20
Multiply that final figure by 1000 (so $6400/day instead of $6.40/day) in your example. The wellhead price is in Mcf (1000 cubic feet). The production is in terms of MMcf (million cubic feet). The mcf references getting thrown around (not just by you) for both price and production messed up your calculation.
Permalink Reply by msfva on August 21, 2008 at 12:00
Can you tell me how much severence taxes will take out of the royalty? I have no clue.
Permalink Reply by Lrb2brnot2b on August 21, 2008 at 2:45
Would be very realistic if a very hot well was drilled and the potential to drill another existed. The o/g people want as much as they can get as fast as they can get it.
Permalink Reply by Mike on August 21, 2008 at 4:30
Do they? Given the limited number of drilling rigs available I see their priority 1 as getting 1 producing well per production unit within the next 5 years. I think the last thing they want is to shell out a bunch of bonus money again.
Permalink Reply by RAY on August 21, 2008 at 5:54
True, the ideal is put in 1 well per unit to hold the lease, then come back and do the 80-acre spacing.

everybody keep saying the "$$ is in the royalty".
it is, but we are talking long term.
Permalink Reply by Margaret Wren on August 21, 2008 at 6:03
signed in 1998, 15 wells lcv in 10 years all producing, another site being prepared right now. sec 36 17n 11w
Permalink Reply by Tom Fullery on August 21, 2008 at 6:35
You can all but disregard the old notion of 80-acre spacing. I think that's a holdover from the conventional oil wells, in porous sands. The CV, LCV, and HS have very low permeability, meaning a well can't be expected to drain an 80 acre area like an oil well in 25% porous sand. Rather, the CV has a porosity of around 2%. 20 acre spacing is said to better, though in the Barnett, I'm hearing 12 acres. No facts, just heresay. Looking at my maps I've put together using SONRIS, I've seen wells in our area spaced as closely as 150 feet. Now, you may say, sure, one's producing and it's close neighbor is just an alternate site, with no plans for a well. Not so. In fact, CHK has a pair of horizontals being drilled simultaneously that are 300-something feet apart. That doesn't sound much like 20 acre spacing, much less 80. I'm curious to find out where the well bottoms will be to see if they drilled horizontally in opposing directions, or if they're running side by side. No way to know yet, they each just spudded in the last month.

With regard to the original question, I've seen numerous leases with 20 or more wells. (Those take several years, but hey, good things take time) So even if some of the wells are only producing 300 or 400mcf a day, over the course of the entire unit, there's some serious royalty being earned.
Permalink Reply by Grillin' - MmmMmm on August 21, 2008 at 7:48
Tom, you'll see CV and LCV in the 10 acre spacing. However, the Barnett has downspaced to the equivalent of 40's and some are looking into less than that but currently piloting. Since most are using horizontal wells, the old concept of 40-acre spacing is a bit of a misnomer. No longer are wells jus a vertical spot. But the equivalent spacing I'm hearing for Haynesville is likely to go to at least 80's, maybe less but we'll see.

The wells you are seeing in Sonris, are these surface locations or are these bottomhole locations? More than likely, you'll see wells drilled from close surface locations but the wells will be spaced further apart downhole. In the Barnett, we are drilling 8-12 wells from a central location within 100 feet of each other, but when the hit the reservoir they are over 1000 feet apart.
Permalink Reply by Mike on August 21, 2008 at 9:02
Aubrey McClendon, CEO of Chesapeake, alluded to 8 wells/section earlier this month when he defended Chesapeake's HS gas in place and recoverable calculations. Here's the link: http://www.gohaynesvilleshale.com/forum/topic/show?id=2117179%3ATop...

The paragraph I'm referencing reads:
“Our experience and analysis tells us that on average every square mile of core and Tier 1 Haynesville shale has an average of 180 billion cubic feet of gas in place. From that gas in place we are estimating that we will recover about 52 Bcf per square mile to the drilling of eight wells per square mile. This would result in per well average recoveries of about 29% of gas in place which is consistent with expected Barnett recoveries although Barnett drilling is 50% more dense than planned Haynesville drilling."
Permalink Reply by danny meyers on August 25, 2008 at 16:09
the map feature on sonris shows the horizontal portion of permited and producing wells direction and distance

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