What's Our Royalty?
We need help. We own half the mineral rights on our 40 acres in the Fayetteville Shale area. We expect to be drilled this year and the average yield in our area is 3.0 million cubic feet per day. The annual royalty is calculated this way:
Royalty rate X Average yield rate in 1000 cubic feet units X 365 days X our percentage of the production unit = Our annually expected royalty
Our question is: Can anyone tell us the size of the typical production unit in acres?
In our area, the energy company normally drills vertically 4000 feet, then drills horizontally 4000 feet.
Please help us make an annual royalty guess.
Thanks.
Wayne and Anna
Royalty rate X Average yield rate in 1000 cubic feet units X 365 days X our percentage of the production unit = Our annually expected royalty
Our question is: Can anyone tell us the size of the typical production unit in acres?
In our area, the energy company normally drills vertically 4000 feet, then drills horizontally 4000 feet.
Please help us make an annual royalty guess.
Thanks.
Wayne and Anna
Views: 32
Replies to This Discussion
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Permalink Reply by Cathaus on
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Hey you two..............you must be trying to decipher my allowance! Have you filled out my adoption papers? I thought we could have this all done in time for my birthday. I was really looking forward to something with a little bling!
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Permalink Reply by WayneandAnna on
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Okay, how many carrots are you expecting? We need to get the order in soon. Anna and I are so excited to have a daughter.
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Permalink Reply by Cathaus on
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We can start out with a tiny little one carrot and then next year trade up. I don't want to be greedy!
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Permalink Reply by WayneandAnna on
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We did see the 640 acres show up frequently in the commissions unit size, but some sizes as small as 40 acres did occasionally show up, but those seemed to be some govenmental areas.
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Permalink Reply by WayneandAnna on
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Buck, you are exactly right. I called the Arkansas Oil & Gas Commission. After being handed off three times, I found someone as smart as you. So now will know what to expect. This keeps me from being overly optimist or pessimistic. I'll get started on those tomatoes.
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Permalink Reply by little ole 1st grade teacher on
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Go on line and look up Natural Gas Royalty Calculator. It will walk you through the steps that you will need to do. It gives you the daily, weekly, monthly and yearly estimates.
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Permalink Reply by WayneandAnna on
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Yes, I did that. The calculator referred to a "production unit" which was the source of my question. The calculator would not work unless I knew the size of my "production unit." I've now determined my production unit is a section, 640 acres. So, now the calculator works.
We've been told we are going to be drilled, so my next question is how many wells are they likely to put on one section? I've not seen more than 3, but I've not seen all the sections.
The company's average well in the last half of 2008 produce 3 million cubic feet per day, but they say their average is above that now. We're also told we are in a sweet spot, whatever in the world that means.
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Permalink Reply by WayneandAnna on
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Buck, which group are you refering to?
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