How does Antero come up with the ever changing monthly oil/gas wellhead pricing paid to their royalty owners? I know its market driven just curious how they reach that number listed on the royalty statement. Thank you
I’ll bet there aren’t more than a handful of people at Antero that actually know how they come up with that number. In general, it’s a formula that includes the weighted average of daily sales prices (the price that they sell gas at changes every day, and maybe even during the day), the amount of costs that they can deduct, the type of gas they sell (methane, ethane, pentane, propane, butane, etc., all come out of the same well but have different values), how much they sell, and who they sell it to (different buyers will pay different prices). The price they get varies daily because of supply and demand forces, which are influenced by the weather, logistical restraints (LNG plants closing and opening, power plants doing the same, pipeline availability, the contracts that different gas producers have with the pipeline companies, and all kinds of other things) as well as stock market speculation. Honestly, you could spend a lot of time researching this. Start searching the things I’ve listed here and you’ll have a good start.
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Thank you for your response Kyle. It gives me some insight,also a place to start.
How about the index Antero wants to use to pay you? We want well head volume at selling price not yje index price they want to use…will we be successful?
Absolutely try for that. I won’t be surprised if they say no. They’ve recently changed the language that they add to the lease when we ask for gross proceeds and they’re adamant that we use that specific language. A year ago they would have been more flexible. Right now they are insisting on their specific language.
That said, most of my clients have small net mineral interests, so they don’t have a lot of negotiating leverage. If you have a lot of minerals you might have better luck than we have so far.
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Thank you for the reply.
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