I have just signed a lease on 3 wells with PetroEdge Energy in Tyler County WV. I am the sole owner and they are going to pay me 18%. The Landman says that adjacent properties are doing "very well" at 10-11 million cubic feet a day.
I have used the calculators and am coming up with an insane amount of money per month, can someone PLEASE tell me if the calculations are right? This is for one well!
Natural Gas Royalty Estimate
Here is the data that you entered
18.00
Your royalty rate.
$3.65
Average wellhead gas price.
10
Average well production rate in millions of cubic feet per day.
1
Acres you own within the well's production unit.
1
Number of acres in the well's production unit.
$197,100.00
Your expected royalty payment per MONTH (before expenses).
This information is provided by Geology.com for entertainment purposes. The amount of your actual royalty can differ significantly from what is shown above. The royalty payment above is based upon the information that you provided. It includes assumptions which might not fully represent the conditions of your lease/royalty agreement and market conditions at the time your gas goes to sale.
I haven't used the calculator, but unless you own all the acres in the production unit, you wouldn't get that. The number you put in is 1. If the unit is 640 acres and you own 1 of those, your monthly before expenses would be about $300. However if you own 64 acres, you get about $19700 (before expenses). Etc.
I wonder if you are the other owner for the area i have interest in. Is your land near ten-mile in the Ellsworth distrct?
I signed a lease for our first property last year. We had 1/6th of 118 tract. Then a couple months ago sign a second lease for another property 1/2 of 50 or so acres. He mentioned on the phone that they planned on drilling on our site. I'm sure it was a tactic to get us to sign the lease but since we already had one lease with PetroEdge I didn't have a reason not to sign the second one.
Something to consider is that in my contract if only part of the tract is within the 640 acre square then I would only get a percentage of what land they use. For example of 1/2 of my 118 tract was outside of the 640 drilling square then anything I would receive would be divided in half.
I did some rough calculations on any income I would receive from royalties and placed that number in the couple thousands a month. Nothing to quit my job over but will really help us. Also, from what I have read the production volume goes down every month and wells are generally active for a year or two.
The problem I have with those calculators is that we don't really know how much of our land they are going to use for drilling (if the 640 acre square only covers part of our tracts). Second, we won't know production until they actually drill so it's hard to estimate that. Since I only own a percentage of each tract the final number for me will be fairly low.
Are those the acreages you own, or the unit acres or both? Those are small sizes for horizontal well acreage sizes but you still sound like you have a substantial amount of the total. And remember, like the royalty calculator says, there will be a decline. But still, sounds very good.
My great great grandfather was Rice, so I'm not sure if there is a connection. They do have another site in the Ellsworth district that they are actively drilling from. We would have to compare map #'s. The best description I have is 10 mile, which isn't on any map and wouldn't know unless your from that area.