Replies to This Discussion

Permalink Reply by Henry on June 30, 2010 at 13:02

You might want to all the companies. I once called Chesapeake, and the lady in the land department actually walked me through the statement explaining each line to me. Probably the only time in history that Chesapeake was ever nice to a landowner.

Permalink Reply by Two Dogs, Pirate on June 30, 2010 at 13:54

Henry, what you told that lady to get her to walk you through the statement?

Permalink Reply by Henry on June 30, 2010 at 23:21

I was on the phone line with the statement, and she called it up from her end on her computer, and she walked me through each column, and what it meant. I did not have two companies to deal with, so that made it pretty easy.

Permalink Reply by Les Bamburg on June 30, 2010 at 14:31

Charles, can you provide more details.

Total Acres in Unit
Your Acres in Unit
Your Royalty %
EnCana/Shell Total Acres in Unit

Permalink Reply by Charles Free on June 30, 2010 at 15:10

Total acres in unit=638.62
My acres=49.9
Royalty=3/16
EnCana/Shell Total Acres in Unit=??? don't see where this figures into the eqation.

Les, to figure my fractional interest I should take: Size of Your Property/Size of Unit × % of Your Mineral Ownership × Royalty %
from your Oil or Gas Lease = Your Decimal Interest in the Unit. 49.9/638.62 X 1/24 X 3/16 this equals 0.00061044. Correct? Each paid at a decimal interest of 0.00030522. Shell sold a gross volume of 133,558 mcf/btu factor of 1.00 at a unit price of $3.91. They paid me $143.86. Encana sold a gross volume of 103,474.75 mcf/btu factor of 0.947 at a unit price of $3.58. They paid me $113.01. This totals $256. 87 paid to me by both companies. Total mcf pulled from the well is 237,032.75. If I was getting a royalty check from one compay and they sold it at a unit price of $3.58, I would have recieved a check for about $460.00. See my confusion?

Permalink Reply by Les Bamburg on June 30, 2010 at 16:33

Charles, I concur that on first read the payments do not look correct (ie 50% of the right amount).

The reason I asked about the EnCana/Shell acres in the unit is because I view their gas sales would relate only to the acreage they have under lease in the section (unit). In this case they likely have all 638.62 acres under lease so it becomes a moot point.

My opinion is each company would owe you 49.9/638.62 * 1/24 * 3/16 * Their Gas Sales Revenue assuming EnCana/Shell have all acreage leased. If another company had some acreage under lease in the section I believe the calculation would be different.

Permalink Reply by Charles Free on July 1, 2010 at 5:52

If there is another company leasing in the section I would still recieve royalty checks from them, correct?

Permalink Reply by Les Bamburg on July 1, 2010 at 15:06

Charles, I believe no because you only collect royalty from your lessee. That is the reason I asked about the total acres they had leased in the section. For example lets say you leased 32 acres (20% royalty rate) to Company A and Company controls 320 acres in a 640 acre unit. For the month Company A sells 100,000 MMBtu of gas at $4 per MMBtu.

Your royalty should be 32/320 * 100000 * $4 * 20%. In other words Company A's gas sales for the unit would be allocated to the acreage Company A has under lease in the unit. Someone else may have a different opinion.

Permalink Reply by Charles Free on July 1, 2010 at 15:10

No Les, EnCana has all 640 acres leased.

Permalink Reply by Howard on July 6, 2010 at 13:37

Les, I was under the (perhaps false) impression that units were established based on a section (640 acres) because the well was drawing on the gas resources presumably within the 640 acres. Using your example above, let's suppose that Company B is also a lessee of 320 acres in the same unit as Company A. Company B does not have a well in that unit. So with 640 acres in the unit, Company A controls 320 acres and operates a producing well. Company B controls 320 acres but does not have a well. 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? Thanks.

Permalink Reply by JeffNParis on July 1, 2010 at 10:14

Charles,
The amounts you listed "$143.86" and "113.01" - is that per acre (49.9) or total amount paid. Surely it's not the total amount paid for the month?
JeffNP

Permalink Reply by Donna Thornton on July 1, 2010 at 11:15

Yes, for the month. Charles owns 1/24th of the 49.9 acres that his family has. So, he owns .00325571 of the section.

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