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.
Views: 171
Replies to This Discussion
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Permalink Reply by SBossierGuy on
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In a word - yes!
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Permalink Reply by Chuck on -
So if your lease is for 25% royalties,and they put 8 wells in your section,do you draw 25% off of each well?
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Permalink Reply by Margaret Wren on
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not each well but your share in each well
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Permalink Reply by RAY on
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WORST CASE:
the wells only produce 1mcf per day, but they will have 8 wells per unit.....
1 acre
8 mcf per day
$8[well-head]
25% Royalty
about........................... $9,000 per yr.
remember....this is WORST CASE:
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Permalink Reply by RAY on
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if you would like to play around with different figures.
just plug the numbers in the Royalty Calculator:
http://geology.com/royalty/
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Permalink Reply by RAY on
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the "play" calls for 80-acre spacing;
8 wells X 80 acres ..........640 acre unit.
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Permalink Reply by doublebogey on
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are all production units 640 acres/
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Permalink Reply by Rick Cash on
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No. as I said in another reply, there is an application to convert the area around my land to 320 acre units. The royalties will be divided by 320 instead of 640. (So I like it)
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Permalink Reply by Iris on
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Let me rephrase from earlier ? if this is worst case...how realistic is it to have 8 wells per unit (640 acres)...
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Permalink Reply by Grillin' - MmmMmm on -
Very realistice...eventually. But remember, if you own 64 acres in a 640 acre unit, you only own 10%. So you will get your royalty rate (say 25%) on your portion of the gas (10%). So if the wells each produce 1 mcf at $8/mcf that is that is $64 per day but you only own 10% of that so you get your 25% of $6.40 per day, less severance taxes and any other deductions for treating/transportation as per your lease terms.
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