Replies to This Discussion

Permalink Reply by kmfioc on August 20, 2008 at 5:12

yes, if your entire section is included in the unit.

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Permalink Reply by SBossierGuy on August 20, 2008 at 5:12

In a word - yes!

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Permalink Reply by Chuck on August 20, 2008 at 10:18

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 August 20, 2008 at 10:23

not each well but your share in each well

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Permalink Reply by RAY on August 20, 2008 at 10:40

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 August 20, 2008 at 10:46

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 Chuck on August 20, 2008 at 10:55

Thanks RAY-Cd3

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Permalink Reply by RAY on August 20, 2008 at 11:06

the "play" calls for 80-acre spacing;

8 wells X 80 acres ..........640 acre unit.

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Permalink Reply by doublebogey on August 21, 2008 at 3:00

are all production units 640 acres/

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Permalink Reply by Rick Cash on August 21, 2008 at 11:27

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 August 21, 2008 at 2:34

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 August 21, 2008 at 2:39

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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