Replies to This Discussion

Permalink Reply by Charles Free on July 1, 2010 at 7:27

Okay, I just got off the phone with a lady from Shell. She tells me that both companies have to calculate your royalties on the total amount pulled from the well(just as I was thinking). She tells me that EnCana's number is wrong. They each then sell their half. When calculating your royalties, they have to use the total drawn(which she says was 133,558mcf), muliply by their sale price, multiplied by 1/2 of my royalty(.00030522). This gives the gross royalty amount. This makes sense. So now I have to deal with Encana to get their amount right.

Permalink Reply by Donna Thornton on July 1, 2010 at 7:49

Charles, thanks for helping us out and sending us through Royalties 101. This whole journey is a real learning experience, huh. Hoping to get some of my own mailbox money in the next couple of weeks from Sec. 9. My Sec. 12 property (near yours) just started drilling on May 24th. Hopefully it will produce and we'll see something by year end.

Permalink Reply by Charles Free on July 1, 2010 at 10:00

Donna, that would be great. We are hoping for another well in our section. Probably won't be for a few more years. I just got off the phone with EnCana and she agreed that the amounts should be the same. It will be a couple of days before I hear back from her.

I would love to meet you and your family sometime.

Take care.

Permalink Reply by Les Bamburg on July 3, 2010 at 2:42

Charles, this works because EnCana/Shell basically control 100% of the mineral rights in the unit (section). The calculation would be different if another company also had a working interest in the unit.

Permalink Reply by Howard on July 7, 2010 at 4:47

Les, what if Company A controls 320 acres and operates a producing well. Company B controls the other 320 acres but does not have a well. What is the calculation for lessors of Company A? Do the lessors of Company B in this unit share in any royalties of Company A's well based on their lease terms with Company B since it is all part of one unit?

Permalink Reply by Les Bamburg on July 21, 2010 at 17:05

Howard, in your example the section would be unitized and Company A and Company B would share 50/50 in the gas production from the well.

Normally each company would market its 50% share of the gas production. So the lessors of Company B would receive their royalties based on the volume and price of Company B's gas sales only.

For some units the unit operator will handle 100% of gas marketing. In those cases the operator should pay all royalties.

Permalink Reply by Charles Free on July 1, 2010 at 10:02

pelkid, you are pretty close to right on the percentages but, the mcf numbers should be the same.

Permalink Reply by Charles Free on July 1, 2010 at 10:09

Thanks Bill, I will look into that.

Permalink Reply by Charles Free on July 1, 2010 at 10:26

This link is another good resourse for reading your royalty statements. It does not however, deal with multiple producers.

http://www.mineralweb.com/owners-guide/leased-and-producing/oil-and...

Permalink Reply by Jack Blake on July 2, 2010 at 17:16

Jack Blake says having to learn about royalty checks seems like a good problem to have. Hopefully Jack's well (Matthew Murray #21 in section 21 t10n r11w) will begin producing soon and Jack will have to double check royalty payments.
Anyone hear the current status of Matthew Murray #21?
Thanks,
Jack Blake

Permalink Reply by Charles Free on July 7, 2010 at 6:31

Jack, Matthew Murray as of 06/11/2010 WAITING ON COMPLETION. If this is a good hole they will have to frac the well and install a pipeline before it starts producing.

Permalink Reply by Gambler on July 21, 2010 at 10:58

Charles, have you heard anything about #239985 well? I have tried to find some production info but have not had any luck. You seem to have alot of knowledge about this so i thought i would ask you. We were told that we would be receiving some mailbox money sometime this month but nothing yet. Any help would be appreciated. sec4 t9 r11 thnks

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