Oil Royalties vs. Gas Royalties
Replies to This Discussion
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Permalink Reply by j garrett on -
It's you % of production, just like gas. If oil is $80 per barrel, and your well produces 100 barrels per day, that's $8000 total production. If your Division Order says you own 2%, then your royalty is $160 per day.
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Permalink Reply by The_Baron on -
full rate of severance taxes on oil is 12.5%
Oil/Condensate/Similar Natural Resources Per barrel of 42 gallons
Full rate oil/condensate 12.5% of value
Incapable oil rate [R.S. 47:633(7)(b)] 6.25% of value
Stripper oil rate* [R.S. 47:633(7)(c)] 3.125% of value
Reclaimed oil [R.S. 47:648.21] 3.125% of value
Produced water-full rate [R.S. 47:633.5(C)(1)] 10.0% of value
Produced water-incapable oil rate [R.S. 47:633.5(C)(1)] 5.0% of value
Produced water-stripper oil rate [R.S. 47:633.5(C)(1)] 2.5% of value
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Permalink Reply by The_Baron on
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which, as an aside, is interesting, since oil is set by %, but gas is set by $/mcf....The state benifits (and suffers) along with the RI and WI when the price rises and falls on oil, but gas is just a matter of production #'s.
for gas:
The tax rate for natural gas and equivalent gas volumes of natural gasoline, casinghead gasoline, and other natural gas liquids per 1,000 cubic feet at a base pressure of 15.025 pounds per square inch absolute and at 60 degrees Fahrenheit is adjusted annually on July 1 and may never be less than 7 cents.
Type Rate
a. Full Rate - 7/1/2009 to 6/30/2010 [R.S. 47:633(9)(d)(i)] $.331 per MCF
b. Incapable oil-well gas [R.S. 47:633(9)] $.03 per MCF
c. Incapable gas-well gas [R.S. 47:633(9)] $.013 per MCF
d. Produced water-full rate 7/1/2009 to 6/30/2010 {R.S. 47:633.5(C)(2)] $.265 per MCF
e. Produced water-incapable oil-well gas [R.S. 47:633.5(C)(2)] $.024 per MCF
f. Produced water-incapable gas-well gas [R.S. 47:633.5(C)(2)] $.0104 per MCF
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Permalink Reply by adubu on
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Baron--In Texas severance for NG is % of your gross --standard is 7.5% ,but on some wells "High Cost Tight Gas" that cost more to produce like the Cotton Valley sands and the shale --exemption given by state at reduction is tax from the 7.5% down to Zero for 10 years to offset the extra cost. Rates for wells could be different even in same unit.
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Permalink Reply by Tiredpharm on
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I am so confused about these deductions from royalty payment that I hope I can ask a question on this site even though the property interest is in Rusk Co, TX. I get royalty checks from Samson, XTO, and GMT, and the deductions in each payment are very different. Samson takes an average of about 15% (14 to 18% range between months) so my net is about 85% of gross. XTO takes an average of about 25% (ranges from 18 to 30%). Both of them list severance, and some combination of dehydration, transportation, compression, and treating. Yet my last check from GMT was for $164.36 and the gross was $164.40 -- difference of 4 cents! I don't understand the difference between these deductions. Are Samson and XTO passing their costs on to me? Are these percentages in some fine print in a lease I once signed? Is this something to watch out for in future lease agreements? Thanks for insight from the more experienced folks.
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Permalink Reply by 221caribbean on
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ok....I get what j garret said regarding how much money YOU make at a certain % but can someone break it down as to where all the money goes? Who all makes money off of an oil well? I am guessing the oil company, the drilling company, the mineral owners.....who else? And what percentages?
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Permalink Reply by j garrett on
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The operator and their partners get everything but your royalty and taxes. Drilling companies, servicing companies etc are paid by the operator. Their interest is called Working Interest. Yours is a Royalty interest. They use the money to pay for the well and completing the well, which can cost 10 million dollars. After "Payout", when the well has paid for itself, it is their free cash flow. Then the rinse & repeat.
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Permalink Reply by Les Bamburg on
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JG, you may just add that the operating expenses continue after the well reaches pay-out. This includes the operator's personnel, 3rd party service providers, contractors, insurance, materials, vehicles, etc.
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Can you be more specific? Let's say a well is making $20,000 a month, a low producer am I right? I am assuming the oil company makes the most money. What percentage? And then comes the drilling company (is the drilling company and operator the same thing?) and everyone contracted to drill a well? How is it profitable to keep a low producing well operating? Seems like it will take forever to pay for the cost of the well. How do I compute payout on a 3/16 royalty using the figure above?
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