Is $81,250 Total Return a conservative estimate for royalties over the life of the play for 1 acre? Or I could use Cheseapeake's numbers and arrive at $142,187.50

Check my math.

If the EUR for 1 section is 52 BCF

divide 52,000,000,000 by 640 acres

81,250,000

divided by 4 (25% royalty)

20,312,500

divided by 1,000 (mcf)

2,031,250

multiplied by $4.00 per mcf

EQUALS

$81,250


Does this sound reasonable?

Did I forget to include something.

I tried to be VERY CONSERVATIVE.

FOR SOME REASON CHESAPEAKE HAS A STORY OUT USING $7.00 FLAT PRICE FOR GAS. I ADDED THIS TOO JUST FOR FUN.

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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
Thanks. I fixed it.
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.
I'm hoping the whole computation is VERY conservative.
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.
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.
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.
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
Now we need a calculator based on the decline rates in the price of natgas.
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.
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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