Replies to This Discussion

Permalink Reply by Ken Boone on May 9, 2012 at 12:08

receive

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Permalink Reply by Andrew on May 9, 2012 at 13:11

The same amount of time it takes for the well to break even. If the well never breaks even, the UMI interest never gets paid (assuming they didn't put up their share of the costs). In the Haynesville Shale some wells paid out well under two years after completion, whereas some of the recent Tuscaloosa Marine Shale wells may never pay out. It all depends on the play, the operator, commodity prices, etc.

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Permalink Reply by Bobi Carr ("parker") on May 9, 2012 at 14:10

At $2.36, it's gonna take a long time.

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Permalink Reply by The_Baron on May 10, 2012 at 5:06

if ever. esp with the way CHK operates their wells.

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Permalink Reply by Greedy Landowner on May 9, 2012 at 15:42

In my case, 21 months from date of completion.

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Permalink Reply by Ken Boone on May 9, 2012 at 16:21

Well in my case, it's been 12 months so far.

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Permalink Reply by Greedy Landowner on May 9, 2012 at 22:36

Are you getting your quarterly statements from the operator?

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Permalink Reply by Ken Boone on May 10, 2012 at 0:10

No, I haven't received any quarterly statements yet.

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Permalink Reply by The_Baron on May 10, 2012 at 4:56

You need to send a certifed letter requesting statements.

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Permalink Reply by Andrew on May 10, 2012 at 8:01

Greedy Landowner and Ken, where are your wells? Don't need SSTTRR, just curious which Parish and which play. 

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Permalink Reply by Henry on May 9, 2012 at 23:19

Ken,

This is a question you ought to be able to answer yourself.  You should be recieiving quarterly statements from the operator, that outline expenses and revenues.  If you aren't, write the operator a letter (send it by certified mail), telling them that you are an unleased mineral owner in the well, and ask for that info.  T.hey should send you an explanation of expenses, as well as a listing of production, gas prices, and revenue to date

Also, you can do a rough calculation yourself.....  I'll outline one such calculation, and you can plug in different numbers to explore various scenairos.  Assume the cost of your well is $10M.  Assume your well will ultimately produce 5 Bcfe.  At $2 gas, you will just break even, and never make a penny.  At $3 gas, you will break even after 3.3 Bcfe have been produced (this could take a few years), and then start to make money. 

It's a simple calculation.  And if you are going unleased, you really ought to understand the numbers and economics of this "business venture" that you are entering into.

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Permalink Reply by Johnny on May 10, 2012 at 2:24

It depends on a lot of factors, well output, gas prices (which are low as you probably know - $2 level).  Some wells never payout.  With today's prices it will probably be a number of years for the average well, maybe 5 - 10 if ever.

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