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Permalink Reply by dbob on June 3, 2018 at 5:35

What oil and gas is worth at a well head is a pretty complex question.  Quality of the oil/gas as well as how it has to be transported affects what its worth.  For example, gas with no pipeline is essentially worthless.  

In Texas, the RRC Production Data Query is the simplest free tool to use to see what has been withdrawn from a lease or unit:  http://webapps2.rrc.state.tx.us/EWA/ewaPdqMain.do   Its not the greatest tool when there are multiple wells on a lease, but its a start. 

 

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Permalink Reply by True Texan on June 4, 2018 at 5:37

Can multiple grades of oil come out of the same well head each month? 

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Permalink Reply by Skip Peel - Mineral Consultant on June 4, 2018 at 12:53

In regard to multiple grades out of the same wellhead, not that I'm aware of.  Trying to determine a wellhead price is like tilting at windmills.  Depends on the location of the wellhead.  Depends on the API gravity of the crude.  The amount of H2S and other impurities that cost to remove.  Depends on how much it cost to get it to a sales point - available pipeline capacity or tanker truck.  Depends on whether you want the hedged price or the un-hedged price (spot or monthly settlement price).  The variable are not endless but many. 

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Permalink Reply by dbob on June 4, 2018 at 13:34

True Texan -

A slightly different take on Skip's response.  In general, a well will only produce a single grade of "oil" in a given month.  There are certain circumstances with with down hole commingling, that might allow a well to produce grades of oil that differ, but its coming up a single pipe.  I'm not a revenue/production accountant, so I'm not sure how that would look.  In addition to "oil" wells can also produce natural gas liquids which would require (generally) off-site chilling and handling to capture/sell.  Again, how that is handled on a pay stub is not within my pay grade.  

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Permalink Reply by shelby on June 12, 2018 at 5:09

True Texan
I don't know about oil, but, have come to the conclusion that natural gas has no value at the wellhead, and that value is only created after the gas is processed and transported. In "market product" states like West Virginia there is defined "value" at the well head, but, most leases are designed with the same language as in most other parts of the country, creating value only after the gas has been processed and transported. I believe Texas has established court precedents that gas has -0- dollar value at the wellhead.
Shelby

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Permalink Reply by shelby on June 12, 2018 at 5:09

True Texan
I don't know about oil, but, have come to the conclusion that natural gas has no value at the wellhead, and that value is only created after the gas is processed and transported. In "market product" states like West Virginia there is defined "value" at the well head, but, most leases are designed with the same language as in most other parts of the country, creating value only after the gas has been processed and transported. I believe Texas has established court precedents that gas has -0- dollar value at the wellhead.
Shelby

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Permalink Reply by Skip Peel - Mineral Consultant on June 12, 2018 at 5:17

shelby, did you inadvertently post your reply twice?  I ask because the site seems to be experiencing some glitches today.

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