"In almost 30 years of working primarily for operators in the oil and gas industry across North America, I have never seen an estimation of future royalties like the example you provided.
The royalty burden and royalties payable are not directly…"
Niel Loeb's Discussions
Estimate royalties based on company investment
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Is there a way to estimate expected royalties based on what a company invests? Surely companies do this when calculating whether to invest in searching and drilling for minerals.Example 1: A company…Continue
Started this discussion. Last reply by Ryan Howrish on Monday.
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"Is there not an industry formula for Royalty Burden based on total expenditures? I envision an example from an industry study saying something like “Of the money an oil and gas company spends on research, acquisition, and operations,…"
Ryan Howrish replied to Niel Loeb's discussion Estimate royalties based on company investment"Below is a brief summary of interest definitions and a sample cash flow calculation. Every operator will have some form of a full development plan that accounts for their entire lease position. This is how future drilling inventory is managed…"
Ryan Howrish replied to Niel Loeb's discussion Estimate royalties based on company investment"Sure - that's a good idea. I'll put something small together and share it in this thread."
Ryan Howrish replied to Niel Loeb's discussion Estimate royalties based on company investment"The short answer is yes companies run full-field development economics, including land acquisition costs, before investing any capital (large or small). Part of the economic evaluation includes an estimate of the royalties to be paid because…"
"Something that people need to understand is that a very large percentage of the factors going into how much a company received back (if anything) are uncertain. The oil biz is rife with uncertainty. You could have everything perfect (as it can be)…"
Estimate royalties based on company investment
Is there a way to estimate expected royalties based on what a company invests? Surely companies do this when calculating whether to invest in searching and drilling for minerals.Example 1: A company provides a $100,000 lease bonus. They obviously expect to pull more than $100,000 out of the ground over a certain period of time. But can you estimate their expected royalties payments during, say, the most-productive period of time (which I understand is perhaps the first three years)?Example 2:…See More
"Thanks"
"Are these good numbers, i.e. is it producing a large amount?"
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