My brothers and I recently leased the mineral rights to our land in Oklahoma. They claim to average 150 boe/d, which I learned means 150 "barrels of energy per day". Here are my questions: 1) what is the average price per BOE? or How does one find out? 2) Assuming the well produces, how many well do they drill per acre? We have 20 acres. Thanks for your help.
Peter,
What is the legal description?
Tom
By "legal description" do you mean this...? Section 32 -Township 14N - Range 5E; NW/4 less & except RR ROW & 0.5067 acres
Peter, there is no average. It depends on how much oil and quality of oil, how much gas and quality of gas, natural gas liquids, dry gas, plant products. To top it all off, the price fluctuates for everything. Not to mention that not everything gets sold at one time and could make it a nightmare to track.
Thanks. I get it. From what I gather, the oil production is rather low. The area is producing a lot of natural gas and liquid gas (whatever that is). I was hoping to find some kind of rough estimate, but I guess with all of the variables involved, it's far more complicated.
Peter,
Mr. Kennedy has you on the right track. BOE is actually Barrels of Oil Equivalent. A rule of thumb in Oil and Gas production that operators typically use to establish a BOE number is 20 MCF of Natural Gas is equal to 1 Barrel of Oil. However, like Mr. Kennedy suggested, to get an accurate number, there is really a lot more that needs to be factored in. To calculate a BOE very rough estimate, you would multiply the 150 BOE by the current price of oil of roughly $94. I am not familiar enough about your location to help answer your second question. Hope this helps!
Thanks
Texas Tea, sorry to correct you but a boe in terms of btu content is about 5.8mcf. You have to know what percentage is oil and gas. If you had 150 boe at 50% oil you get 75 bbls of oil and 435mcf gas. An estimate at current prices would be $90 x 75= $6750 plus $4 x 435= $1740 for a total of $8490. You are correct that it would take about 20-25MCF to equal the dollar value of I bbl oil but 20 MCF equals about 4 bbls of oil in BTU content.
According to their website the percentage is approximately 2% crude oil, 48% natural gas and 50%
natural gas liquids. Any idea how many wells they drill on 20 acres?
Peter, 50% NGLiquids would be great, because they bring a better price than dry gas. I wouldn't worry about the 2% crude in calculations and if I had to take a rough guess, very rough, I would say that your BOE would be roughly 1/3 of the value of a barrel of oil + or - 5%. Prividing you can actually believe what the website says, a pretty big proviso.
I just wish I could buy propane for what the producer sells it for, I'd buy a tank and come pick it up if I had to drive 100 miles.
Peter Baloff said:
According to their website the percentage is approximately 2% crude oil, 48% natural gas and 50%
natural gas liquids. Any idea how many wells they drill on 20 acres?
Michael,
You're correct, I was trying to monetize it for him without making it complicated, but your totally right. Thanks Michael and sorry about that Peter!
Michael Hutchison said:
Texas Tea, sorry to correct you but a boe in terms of btu content is about 5.8mcf. You have to know what percentage is oil and gas. If you had 150 boe at 50% oil you get 75 bbls of oil and 435mcf gas. An estimate at current prices would be $90 x 75= $6750 plus $4 x 435= $1740 for a total of $8490. You are correct that it would take about 20-25MCF to equal the dollar value of I bbl oil but 20 MCF equals about 4 bbls of oil in BTU content.
Thanks for your help
r w kennedy said:
Peter, 50% NGLiquids would be great, because they bring a better price than dry gas. I wouldn't worry about the 2% crude in calculations and if I had to take a rough guess, very rough, I would say that your BOE would be roughly 1/3 of the value of a barrel of oil + or - 5%. Prividing you can actually believe what the website says, a pretty big proviso.
I just wish I could buy propane for what the producer sells it for, I'd buy a tank and come pick it up if I had to drive 100 miles.
Peter Baloff said:According to their website the percentage is approximately 2% crude oil, 48% natural gas and 50%
natural gas liquids. Any idea how many wells they drill on 20 acres?
Peter, chances are your 20 acres is part of a larger unit, so you would share in the royalties from any well drilled in the unit. A unit could be anywhere from 40 to 640 acres. A vertical well could be spaced on as little as 10 acres while horizontals are usually a minimum of 80 acres. Once you know the size of your unit you can divide your 20 acres by the unit size and then multiply by your royalty interest to get your net royalty.
Example: 20 acres/640=.03125x.1875(3/16)=.005859 net royalty
Texas Tea, leave it to me to make it complicated. I guess I can't help myself!
Got it. Thanks.
So, Michael... Based on this formula, and assuming the unit is 640 and they're drilling one well every 80 acres (I'm pretty sure they're going horizontal), and assuming they're averaging 150 BOE/d and assuming the avg price is about $30 per BOE, I should expect about (just ballparking) $6000/mo in royalties. Make sense?
My brother’s and I have a track of land in Chandler Johnson South Lufkin we never completed lease for 91 min acres. Any update on deep drilling in Haynesville?
Sorry Ryan. I live in Florida and don't know a thing about Oklahoma. My land there was leased by my grandfather before World War II.
Peter, that would make sense but you need a lot more facts to make assumptions like that. Usually when a company is leasing it is for a future well so I don't understand where the 150 boe comes from. In order for a company to justify more than one well it would have to produce a lot more than that. I found that Equal Energy has a well called the Park City 1-32H planned for that section (H is for horizontal). If successful it could make more like 1000boe per day and then you might be talking about more than one well in the section. You would still need to have an idea of how much is oil and how much is gas because they are sold separately at vastly different prices. Is the company you leased to Equal or leasing for Equal? Did they mention the name of the well?
Peter, I found the leases, it's you Martin, Mathew and Eric, right? Leased to Equal.
Here's a diagram of the well, it is kind of an odd layout, it has two horizontal legs. Could be a good one but don't count on more than one well 'til you see how the first one comes out.