Replies to This Discussion

Permalink Reply by essay on July 30, 2009 at 19:10

Yea I came up with $81,250 using those numbers, and I'm willing to bet they're indeed conservative, at least on the average price in the next 5 years if not the EUR

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Permalink Reply by Bobi Carr ("parker") on July 30, 2009 at 19:12

Thanks. I fixed it.

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Permalink Reply by Spring Branch,mineral owner on July 30, 2009 at 19:30

Parker, using CHK's type curve, which seems to require a 14 million/day IP to equate to a 6.5 B EUR, all the wells in the play will not have that 6.5 B EUR, because they don't have a 14 million IP. That is offset by the fact that some wells in the play will have greater than a 6.5 B EUR. Hopefully the $4.00 price turns out to be conservative over the next 20 years.

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Permalink Reply by Bobi Carr ("parker") on July 30, 2009 at 19:46

I'm hoping the whole computation is VERY conservative.

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Permalink Reply by Mac Davis on July 30, 2009 at 22:00

Are your calculations based on 1 well, or on more than one well per section?

Be careful about what you do with your estimate. If it's $80,000, but payments are spread over the next 20 years, the "present value" is a lot less.

Things have been so uncertain recently with fluctuations in natgas price, production curves, pipeline considerations, politics, regulation, LNG imports, oil prices, proposed new gas uses, carbon tax, etc., that almost anything is a wild guess. Don't forget that oversupply may cause a "double dip." The production company may cut back production, and your price per MCF drops as well.

Don't put too much of your financial future into any particular bet on natgas.

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Permalink Reply by Bobi Carr ("parker") on July 30, 2009 at 23:25

Mac,

This is based 8 wells.

I'm not making any PLANS on one well much less 8, but I thought it would be fun to dream again.

$81,250 divided by 50 (years) = $1,625 per year.

That might be Taylor's shoe budget for the future. Or she might have to split it with her husband so he can buy gas for his boat.

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Permalink Reply by Mac Davis on July 30, 2009 at 23:35

Great. There are far too many people who have already spent their shale money before getting a check. Or the people who signed big lease offers, got fake "checks" and then ended up with nothing when the companies reneged.

I'm dreaming, too, but haven't told the boss to "take this job and xxx it" yet.

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Permalink Reply by JeffNParis on July 31, 2009 at 1:57

Has anyone had experience with the royalty calculator at this site, which is supposedly based on decline rates in the Barnett?

http://www.palandowner.com/royaltycalculator.php

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Permalink Reply by Mac Davis on July 31, 2009 at 2:35

Now we need a calculator based on the decline rates in the price of natgas.

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Permalink Reply by JeffNParis on August 1, 2009 at 11:02

Sorry....this calculator is for Pennsylvania landowners NOT Barnett.
It allows for a 20-year decline rate but nothing like the decline rates mentioned for HS.

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Permalink Reply by VSC DeSoto South on August 1, 2009 at 17:28

I have tried it out.Comes up with a higher number. It calculates the totals differently though, the rate of decline is different in PA. I saw Chesapeakes latest chart showing decline rates it looks like production is under '1' by the 3rd year that's faster than I thought. Fun to dream though.

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Permalink Reply by Taylor on July 31, 2009 at 2:15

?

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