Info taken from shreveporttimes.com

Stonewall resident Kassi Fitzgerald offers advice from her viewpoint as a landowner:

Limit the number of wells on your property.
Specify the distance from your home for drilling activities and placement of tanks.
Stipulate where access roads may be built.
Require prompt payment for damages to your home or property due to access, testing or drilling activity.
Require that your property be returned to its prior condition when drilling is completed.
Require safe disposal of waste from drilling.
Discuss your royalty rate prior to signing and set a start date for payments.
Spend money on a lawyer to review the contract prior to signing.

Royalty samples
Abbreviations
MCF = Thousand Cubic Feet
MMCF = Thousand Thousand Cubic Feet = Million Cubic Feet
BCF = Billion Cubic Feet
E = Equivalent (as in BCFE = Billion Cubic Feet Equivalent)
RI = Royalty Interest

Example 1
You own 85 acres of minerals in a 640-acre unit for a gas well that was recently drilled and put on line. With professional assistance, you were successful in getting a 27-percent cost-free royalty stipulated in your oil and gas lease agreement. From that, your royalty interest (RI) in the unit is calculated as:
RI = (85/640) X 0.27 = 0.035859
If in the month of April the gas well made 336 million cubic feet (MMCF) of natural gas, that's 336,000 MCF of natural gas. And if that gas is sold for \$10.50 per MCF, the gross price of the natural gas sold for the month of April is 336,000 X \$10.50 = \$3,522,750. Your share of the sale of the gas, or your royalty, is 0.035859 X \$3,522,750 = \$126,324.
In this example, if you had signed the standard lease that the landman asked you to sign, which requires you to pay a share of the costs of transportation of the gas (by pipeline), marketing and/or other such costs, and if you had taken the 1/6 royalty the landman offered, your royalty would have been only \$77,978, less deductions for your share of the costs, which can amount to as much as 20 percent of the gross.

Example 2
You own seven acres of minerals in a 640-acre unit for a gas well. You made the mistake of not getting professional assistance, and you signed a lease for only 3/16 royalty. In a single month, the well produced 76,250 MCF of natural gas. It's summer, and the price of natural gas has dropped to \$8.50.
RI = (7/640) X (3/16) = 0.002051
Gross price of natural gas sold = 76,250 X \$8.50 = \$648,125
Your royalty = 0.002051 X \$648,125 = \$1,329.
In this example, had you gotten professional assistance and gotten a 30-percent royalty, your share of the gas produced in that month, or your royalty, would have been \$2,127.

Views: 25

Comment

Join GoHaynesvilleShale.com

Comment by Mom A1 on June 18, 2008 at 6:31pm
mommy of three...
you can get a copy from the courthouse or from the company your lease is thru (if they answer their phone). I've also heard people getting them from title companies (??). I don't know how much they charge for copying at Webster Courthouse but I think I saw a charge listing online.
Mom
Comment by mommy_of_three a1 a2 on June 18, 2008 at 12:10pm
I agree with Mom. We really need to know what to do??? I don't even have copies of the original leases. They were in effect when we bought the property. Can we get a copy from the Courthouse???
Comment by Mom A1 on June 17, 2008 at 6:48pm
Exactly what are the land owner's LEGAL rights after the lease is signed?

It may help us all now and in the future even if it is not completely spelled out in black and white in our leases. I've noticed that things like "being released from the lease" is rarely included. I know that ten years ago, we met a landman, then we never heard from anyone else. Most people need to know their legal rights and how to work within the system of big O&G. Consulting an attorney is always an option but most people either cannot afford one or wouldn't know who to call...especially within rural communities where O&G are signing people like crazy. Any feedback would be beneficial.
Comment by mommy_of_three a1 a2 on June 17, 2008 at 4:37pm
I own land in South Webster on Lake Bistineau. It was leased to Samson many years ago. (about 15). There are no wells on my property, but I am receiving a royalty check for one in the area. (About \$10 per quarter) This just doesn't seem right somehow. What should I do??? Is there anything I can do???
Comment by RAY on June 17, 2008 at 4:32pm
Pls do an example of a residental lot [.225 acre]; 25% royalty; \$10
per MFC; at cost, and at cost-free.
Comment by DrWAVeSport Cd1 on June 17, 2008 at 4:30pm
Great info. However, I am looking for more accurate information concerning the calculations per horizontal drilling and spacing.

DrWAVeSport 6/17/08 p.m.

258 members

164 members

674 members

239 members

35 members

12 hours ago
16 hours ago
yesterday