I can understand this is like asking how long is a piece of rope, but I have been trying to get an idea of a future royalty check. Is there an accepted set of figures for making this determination? I know the amount of oil and gas produced (117198 barrels of oil and 206016 mcf of gas), but understand there will be costs associated like transport to refinery, disposal of water, and probably something similar for gas. Can anyone give me rough ideas of these deductions from price at the well, like an accepted percent of market price for instance? This is for rights in Lea County New Mexico.
Don,
Assuming you don’t need to win a bet and get the answer right to the nearest quarter, in my experience you can estimate gross income in Lea County as such:
Oil: Volume x WTI price for that time period (see EIA price history) x .95 (deducts/differential) x .925 (taxes)
Gas: Reported Volume x HHub price for that time period (see EIA price history) x 0.65 (deducts/differential) x .925 (taxes)
At least that is roughly how I do it. Gas income estimate includes revenue from residue and ngls. Gas can be all over the place sometimes as the WAHA differential can get crazy. And when wells are new they may just be flaring most of it. But over time this seems about right. Taxes in NM are not as clean and clear as Texas, or at least it doesn’t appear so to me, but its somewhere between 7-8% over time. Oil drives the revenue.
Obviously you need to know your NRI/decimal to get your net share of the gross. One thing is sure though, it’s never enough money 
You should not have to pay anything to dispose of water. That’s on the operator.
Thank you so very much, exactly the numbers I had been looking for and helps relieve the anxiety of how much the check will be! Thanks again!
And one more question that probably falls into the same category as the question: How long is a piece of rope? For longer term planning, what is the average time between the end of month close and the check being in the mailbox? I have been guessing around 60 days, can that be correct?
IF you have signed a Division Order and are in pay status you should get paid within 60 days of the end of the production month. I got paid 23rd of June for April volumes.
I’m just guessing but you probably haven’t received a check at all yet. It can take a few extra months to get that first check, so the first check is normally around 3 months of payments all at once.
Yes I have not received any payment yet, the production started last November but has been held up on checks because some minor math errors in past deeds to the Division Order, for 7 of us that have been settled or will be soon.
Thanks again.
The rope question is a good one. How long is it? It is equal to twice the length of half of it. Or 3 times the length of a 1/3rd of it.
Just remember, what ever your expectations for getting paid royalty, lower those expectations and you will always be surprised.
Enjoy & good luck.
I was taught it is twice the distance from the center to either end. This amount is well over 30g already so I am anxious and wanting to know all the facts.
The facts will be in the check.
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