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Permalink Reply by travis m. holley on July 2, 2008 at 0:47

I think that your math is generally correct, but that is per day, not PER MONTH.

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Permalink Reply by Mark Gray on July 2, 2008 at 1:02

Well not exactly. Reading back over my post it should have 1/4 ACRE of the 80 acre tract. Still it comes to 3,000 per month based on the figures that I have been reading.

That just sounds unbelieveable to me.

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Permalink Reply by BirdDawg, plain ole' idiot on July 2, 2008 at 1:22

I think you should use a 640 acre unit. I come up with 1/4 acre lot paying $373.24 a month based on the following:
0.25 acre tract
25% royalty
10 MMCF/day well
640 acre unit
$13/MCF gas

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Permalink Reply by Grillin' - MmmMmm on July 2, 2008 at 2:41

I believe you will find that drilling will be much more dense than 640 acres. Barnett Shale is being drilled down to 40 acre spacing ins some areas and 80's are standard. So on 80's, there would be 8 wells in that 640 acre unit, so not 10 MMCF/day, but 80 MMCF/day. Now you should also realize that most shale wells decline very very fast in the first few months and then stabilize. Barnett wells come on at 4 MMCF/day and after 6-8 months are down to 200 MCF/day but produce that for years and years. So you'll be getting really big checks for the first few months and then a nice steady income for years after that.

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Permalink Reply by BirdDawg, plain ole' idiot on July 2, 2008 at 10:10

The numbers I showed are for one 10MMCF/day well in a 640 acre unit. If they drill 10 wells that same size in the same unit, of course your check would be 10 times more. But Haynesville shale units are 640 acres most of the time. But if you are in the unit, you would draw royalties from every well drilled in the unit.

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Permalink Reply by Grillin' - MmmMmm on July 9, 2008 at 7:34

My point was that even though the units are 640's, the well density will be much denser. There will likely be 8 wells in each unit. So the royalty one would get would be his/her percentage of all the wells in the unit as accounted for his acreage in the total 640.

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Permalink Reply by Kenny on July 2, 2008 at 1:27

Looks l=more like it, otherwise, I'm not charging enough rent :)

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Permalink Reply by BirdDawg, plain ole' idiot on July 2, 2008 at 1:35

I used the royalty calculator on the following web site:
www.pagaslease.com/calculator_natural_gas_royalty_form.php

I think it gives you a fairly accurate figure, but I don't think they figure serverence taxes or any other expenses, if any.

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