Good morning. Can anyone tell me the status of the drilling on these two wells? I have already looked them up and know permits were given and drilling has commenced but I cannot find information about anything else. I also know it takes about 2-3 months for them to hit gas/oil. New to owning mineral rights and wondering once they start extraction, how soon after can we expect royalties. Also, how can I calculate what we might be able to expect to receive. Thanks for feedback.
When you post a question it is so much more helpful if you include the location description so folks can locate within the county. They can look up the length of the wells and give a better estimate.
So in general… it takes several months to drill and complete a horizontal well (if that is what you are asking about). Then it takes another five or so months to get the Division Orders prepared to send out to all of the mineral owners. State law determines the time frame in which they must pay you. I do not know WV, but OK is 180 days. Other states are different.
Your royalties are based upon the net acres and the royalty amount in your lease and the length of the perforations of the horizontal well and how they relate to your acreage and the drainage spacing allowed for the well.
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I’m not sure about the drilling status of those wells. I can say that once they’ve started selling the gas they should be sending out checks within a few months. The first checks usually cover the first few months of sales and the rest of the checks are for one month only, so don’t start calculating your new monthly income based off the first check. The old rule of thumb for royalties was about $100-$500/acre/month once all the wells in the unit are in production. I’ve seen more, but I don’t want to get people too excited about their potential future income, because I’ve also seen less. If you have a few net acres, it’ll be a nice monthly income.
Kyle, this old “rule of thumb” of $100 to $500 per acre, per month….is that what one would imagine would be a monthly figure AFTER the initial gush at the beginning?
I found an example of the life-cycle of a horizontal well and according to the authors research, “on average” the wells typically had expressed 94% of their lifespan in the first six years……however, the example indicated it is common for a well to continue producing a residual 6% for ten, even fifteen years later.
Understandably, much focus is centered around the initial checks, but it occurs to me the later “coasting” phase could be quite a nice boost to a Social Security check also.
Thats why I was curious about that old rule of thumb. Thanks
The “old rule of thumb” was probably for vertical wells which have a fairly predictable rate of decline over time. The royalty will vary depending upon product prices.
For new horizontal wells, the majority of the revenue comes in the first five or so years and then they have a long time at a very low rate of flow. They have completely different completion techniques. The shape of the volume flow looks like a hockey stick on its side. The blade is the first few years and the handle is the long rest of the production. Again, product prices, your net acres and your royalty will determine your revenue.
Yep. thats pretty much as I had ascertained. The initial rush is obviously exciting, however its the long service years after that that intrigues me.
I know of one owners whose initial rush was rather spectacular, and even at a reduction of 94% a few years out, the monthly check would nicely enhance a Social Security recipient.
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