Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on December 2, 2009 at 8:15

rickie. I believe "paying quantities" refers to sufficient monetary return on production to cover operating costs.

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Permalink Reply by The_Baron on December 2, 2009 at 10:28

that is about as good of a definition as you can get, you don't even have to make money every month, just so long as you are in the black over time.

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Permalink Reply by The_Baron on December 2, 2009 at 10:30

See Menoah Petroleum, Inc. vs Mckinney, LA App. 2d Cir. 1989

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Permalink Reply by John Avatar on December 2, 2009 at 9:23

10mcfd is sufficient production to hold the lease. At.$4.50 per mcf it's over $6000 per month.

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Permalink Reply by Spring Branch,mineral owner on December 2, 2009 at 10:04

I'm not so sure about your math, John Avatar. 10 x $4.50 = $45.00/day x 30 days = $1,350 per month before paying royalty. If the average royalty is 3/16, that cuts the WI revenue to $1,096.88 per month before expenses. I would have to say it is getting pretty marginal. I own minerals in Section 10 of 15/15 where the only well supposedly holding the section produced a total of 302 mcf for a four month period ending September, 2009. That is an average of 2.52 mcf/day. At $4.50 gas that is $11.29/day or $339/month, before paying royalties. Paying quantuities?????? Yeah right!!!!

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Permalink Reply by The_Baron on December 2, 2009 at 10:27

YOu may not like your check, but there are plenty of operators that have fields and feilds of the types of wells that are doing just fine.

There are some wells in pine island that are lucky to make a barrel a day, but you have an entire field like that, it all adds up.

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Permalink Reply by Spring Branch,mineral owner on December 2, 2009 at 10:41

A barrel a day is $75/day revenue. 2.5 mcf is $10/day revenue. Pine Island is what, 1200 ft. deep. Bethany-Longstreet Cotton Valley is 10,000 ft. deep. There are some subtle and not so subtle differences. I can further assure you that in September, 2009, Fossil did not get $4.50 for their gas.....more like $2.75, which makes the revenue more like $6.88/before royalty. There is one well in the section, not one well per 5 acres.

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Permalink Reply by The_Baron on December 2, 2009 at 10:42

We are not talking about what it cost to drill the well, just what it makes minus what it takes to operate.

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Permalink Reply by The_Baron on December 2, 2009 at 10:43

A gas well not making too much water could be operated pretty cheaply.

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Permalink Reply by Spring Branch,mineral owner on December 2, 2009 at 10:47

But the Cotton Valley wells in Bethany-Longstreet make a ton of water.

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Permalink Reply by The_Baron on December 2, 2009 at 10:50

not all make lots of water. Also, if you have access to your own SWD, cost can be minimized.

We operate a well that makes over 150 bbls/day of water, we have our own SWD. We are able to dispose of this water along with water from our other wells in the field for less than a $100 month.

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Permalink Reply by Spring Branch,mineral owner on December 2, 2009 at 10:54

Including the capital cost of installing the system? I assume it is not being trucked.

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