working on lease with antero, contract says payment in mfc,while it will be converted to mmbtu's. how to convert? need to know how this translates to dollars? Give exsample
Dear Mr.Swiger,
This is not an uncommon question. Oil and gas are minerals -- like diamonds. And, like diamonds there are differrent grades based on purity and other items. The bottom line is that some natural gas is more desirable than others. Natural gas is produced on a volumetric basis, the mcf (not mfc), which is an abbreviation for one thousand cubic feet of natural gas at standard temperature and pressure. However, to equal the playing field, the purchaser buys the gas not on the volume of gas but on the heating content. The heating content is mmbtu, which stands for 1000, one thousand British thermal units. In a perfect world, there is one thousand British thermal units in one cubic foot of natural gas, therefore there are one million British thermal units in one thousand cubic feet of natural gas.
So, here is the conversion. Let's say that the natural gas is very "rich" which is an industry term for having a high heating equivalent. The natural gas is measured and the heating content is 1,200,000 British Thermal Units for each mcf of natural gas. If the price for natural gas is $4.00 per mmbtu then you would receive your proportionate share of 1.2 x $4.00, or $4.80 per mcf.
I really wish that your question was in a forum rather than a blog. You asked your question months ago and I just now saw it.
Hope that this makes sense to you.
Best,
Buddy Cotten