Replies to This Discussion

Permalink Reply by milton A1 on August 3, 2008 at 8:09

Use25% and not.255 for correct calculation.

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Permalink Reply by Kassi on August 3, 2008 at 8:36

for 1 acre in a 640 acre pool with a 25% royalty:
1/640 = 0.0015625 (your share of the pool) Now multiply this by your royalty:
0.0015625 x 0.25 = 0.0003906 This is your true no cost royalty number. Multiply this number by the $32,000.00:
0.0003906 x 32,000.00 = $12.49 per day
Of course this is for a no cost royalty. If any costs are taken out is starts to deminish quickly.

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Permalink Reply by jim neely on August 3, 2008 at 11:04

times 6 wells per section 74.94 / day , 27353 / yr . of course it may take awhile

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Permalink Reply by Randy on August 3, 2008 at 14:11

Kassi, I saw a royalty check from texas recently.

The check was for $79 and he had to pay transportation, the deduction was $1.39.

I know you can't compare it exactly, but just so some people can see an example.

Randy

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Permalink Reply by Hush Puppy on August 3, 2008 at 12:27

These calculations are pretty close to being correct. However, don't forget that Severance Taxes will be withheld and, in some cases, processing and transportation charges may also apply.

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Permalink Reply by bagger on August 3, 2008 at 14:55

That is not very impressive unless the more acres you have the more you make. If I have 45acres would that be 45 times 12.49?

$205,148.00/year?

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Permalink Reply by Randy on August 3, 2008 at 15:11

What would the royalties be big man.... 2 1/2 million? hush up.

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Permalink Reply by Rick on August 3, 2008 at 16:36

Bagger, also remember that the example given is based only on 4 million cubic ft of gas per day. On Chesapeakes webcast this weekend the CEO said that they have learned more in the HS already than they did in several years in the Barnett and that ALL future holes would have long horizontals with numerous (8 or more) frac zones and that the wells they have done this with so far are in the 14-16 million cubic feet range. So if his plans come true, you may can multiply that amount by 3.5 to 4 times per acre. He also stated that they plan to drill 8 wells per section in high potential sections. So eventually you or your heirs can multiply again by 8.

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Permalink Reply by Hush Puppy on August 3, 2008 at 16:37

Yes - And then if your 45 acres is included in 7 additional wells drilled on 80 acre spacing within a 640 acre unit, multiply your number by 8 ($1,641,184). Pretty soon you get to talking some real money.
However, the possibility that 1 well will maintain a production rate of 4,000 mcf per day is probably not very good. Most of the info I have seen show decline curves that are severe for the first 3 years and then leveling out at about 1,000 mcf per day. The real decline curve may very well be dictated by the Operator's take-away capacity.

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Permalink Reply by Johnson on August 3, 2008 at 17:51

wonder if it will matter how close you are to a pipeline.....for take-away capacity.

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Permalink Reply by Rick on August 3, 2008 at 23:40

Johnson, I was told by an old friend who has relatives working in the oil field that pipelines will be a major factor and could slow things down after a couple of years because of lagging capacity. He says that is one reason the O&G's are trying to drill in the corners of sections, trying to catch 4 adjoining corners and lay pipelines to 4 producers or more at a time.

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Permalink Reply by Johnson on August 4, 2008 at 5:38

That makes sense.

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