Replies to This Discussion

Permalink Reply by Bacon on December 3, 2009 at 6:42

It seems that they are pretty accurate for the first month. Not even close for the second and so on. Those things (the ones I've seen) don't seem to have much of a decline figured in.

First month was around $450 an acre net @ $3.40 gas. Second month was about half that. Hard to say how much voluntary curtailment contributed though.

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Permalink Reply by Gambler on December 8, 2009 at 5:18

When you talk about $450 an acre net, what percentage of royalty are you getting. Im just trying to get an idea of what we might expect.

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Permalink Reply by Bacon on December 8, 2009 at 5:35

25%. I think the well averaged 10 mmcfd for the month.

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Permalink Reply by Gambler on December 8, 2009 at 5:45

Thanks,now if i can find out how good of a well we are part of i might have some good info. Sonris is so far behind updating well info.

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Permalink Reply by Bacon on December 8, 2009 at 10:43

Call the company and ask. That's what I've done and they have been very informative.

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Permalink Reply by James CD1 on December 5, 2009 at 15:35

Bump. Anyone out there with some input?

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Permalink Reply by Bob on December 5, 2009 at 17:25

I've gotten 4 months. $3.12, 3.07, 2.52 and 1.97 per 1000. Pretty sad! And when did gas get below 2 for a whole month.I watch prices daily and it goes up and down but I guess they just pick the lowest price of the month and thats what the royalty owner gets. Bunch of crooks if you ask me. but I was pretty ignorant of the whole deal back in 2006 when I signed for my big 150 an acre. plug the above figures into your calculator and thats what you get. They don't hold out any taxes. Thats coming to bite you in the butt later if you don't prepare for it.

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Permalink Reply by Skip Peel - Mineral Consultant on December 5, 2009 at 18:07

The first royalty check for Haynesville Shale wells is for gas sold over approximately 60 to 90 days. The period from the first sales to the first royalty check. Subsequent royalty checks will be for each month's production. Keep in mind the steep decline in production associated with HS wells. The check for the thirteenth month will be approximatesly15% of the second month. The price of nat gas is beyond the control of lessors. We can cuss it and discuss it but it is what it is.

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Permalink Reply by Bacon on December 6, 2009 at 2:26

"The first royalty check for Haynesville Shale wells is for gas sold over approximately 60 to 90 days."

STR doesn't accumulate the fist 2-3 months like that. Your always 60 days behind. One month on each check from the start.

I'd also mention that there seems to be a lot of different ways that the companies determine the price that the LO gets paid for the gas. Some average, some take a particular day and others have a contract with the pipeline co. I'm sure there are other ways as well. You can look at your contract and see what it says.

The big debit on the royalty checks is the "severance tax" . If it is a horizontal well, the company can (and will) file for an exemption, usually after the well pays out, and be refunded all that tax by the state. Keep an eye on that because you should get your part back from the company.

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Permalink Reply by Skip Peel - Mineral Consultant on December 6, 2009 at 3:08

The STR Bacon refers to above is Questar. And Questar does handle their royalty payments differently. The delay in payments from first gas sold to first royalty check can vary quite a bit based on how many lessors exist in a unit. Best practice is to perform a thorough review of ownership interests in order to create a Division Order. If there are a small number of land/mineral owners with straight forward, clear titles to their interest the time required is obviously much shorter than when dealing with a large number of ownership interests and/or clouded titles.

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Permalink Reply by Bacon on December 6, 2009 at 5:33

Right, no interest. The story I get is that they do not pay until they get paid from the pipeline company. Checks go out on the 14th-17th so September gas is paid on 11/14. It'd be interesting to know how long they get the float.

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Permalink Reply by kittycatmama on December 6, 2009 at 6:19

Hey Bacon, love that Avatar!! Nebraska WON against the Longhorns last night. I am a Texan from Austin, but Nebraska WON!!

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