Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on March 15, 2012 at 4:29

MCF = one thousand cubic foot, the standard unit measure of natural gas.  Occasionally you will see MMCF used, it means million cubic feet.  Then a "D" may be appended to either to signify Day.  MCFD = thousand cubic feet per day.  No decimals in production reporting, only in participation interest.  Example, you own 10 acres in a 640 acre drilling and production unit.  10 divided by 640 = 0.015625.  If you are a UMI you receive 100% of that participation interest after well payout and subject to ongoing production expenses.  If you are leased at a quarter royalty then, 0.015625 X 0.25 = 0.0039062.

Permalink Reply by RONNY on March 15, 2012 at 5:29

Assuming:

1. you own your minerals

2. you have a valid lease with a 25% royalty

3. your acreage is 1.91 ac

4. average gas price around $3.00

5. various other factors

you would be owed between $4000 and $6000

Permalink Reply by CB on March 15, 2012 at 9:26

Obviously, you would do better to lease and receive revenues from day one. If you go non-consent and don't lease, you would probably never see a dime; because, the well will never payout. Do the math! The only ones that are making any $ in the Haynesville are the mineral owners that lease.

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Permalink Reply by GoshDarn on March 15, 2012 at 10:18

CB:

In general, I agree with you that inking a good lease is probably better, depending on the acres and terms and operator.

That said, it should also be noted that most HA units/sections (presently) are only being held by one horiz well.  So when the next series of alternate wells are drilled, the numbers might change, if and when NG prices go up in the years ahead.  (Could be a number of years, though).

Also, it seems from reading DrWave's posts, that he did start receiving UMI/UMO payments from CHK (recently).  So if and when he wants to share that cash-flow insight -- such data might explain the income pros and cons for holding out.  And there have been other members who haven't signed, and maybe (?) not all are unhappy with their decisions.  Seems like a few were good-to-go with UMI. 

Nevertheless, I agree that from what we know now, signing a lease is the way to go.

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