Monthly Payouts Mineral rights (Arlington, Mansfield: leases, how much, buying a home)

[39CHEVY]

How about people that are receiving royalties from Barnett Shale
drilling giving us a heads up on what to expect. I think it would be fun to hear
what people are actually getting instead of the landmans pie in the sky estimate. Thanks to all.

Something like
1 acre leased ,100% ownership,25% royalty and last months royalty was 200$

[DFF]

That will depend on a number of factors. Well quality, development density, post-production costs, wholesale gas prices and well unit pooling will all impact the royalty stream.

Well reserves will be determined the thickness and characteristics of the shale deposit in your area. Productivity of a well will be determined by the length of the lateral and the effectiveness of the fracturing in releasing the available gas. Wells typically extract the gas from about one acre per 200 ft of lateral length ... a 4000 ft lateral taps about 20 acres if the fracture pattern is good.

You can see how much gas is being produced by your well by going to RRC's online database. You can also see how much other wells in your area are producing if you use the RRC map function to locate the wells. It is not unusual for a new well to produce several million dollars the first year.

One of the other primary factors on royalty per acre is the total acreage that is pooled in the drilling unit. For example, if a well produces $400 in gas (after post-production costs) and thus $100 (25%) in royalties, the royalties will be distributed proportionately to the mineral acreage in the drilling unit. If it is a 100 acre drilling unit, each acre owned will earn $1. For 500 acre pools, owners get 20 cents per acre. For 20 acre pools, $5 per acre.

As you see, more royalties are paid in smaller drilling units but leases usually allow pooling to large drilling units. On the other hand, small units play out sooner since wells produce a declining amount of gas with time (Google "gas well decline curve" for more information) and are "out of gas" after about 10 years. Large units allow the operator to come back later and drill another well to get more gas from the unit and thus pay more royalties. In large units, royalties continue for a longer time if the operator continues to drill aggresively to tap more of the gas in the unit.

In fact with secondary fracturing and a large amount of wells (one per 20 acres or so in a given pool) many estimates indicate about 50% of the gas reserve can be extracted. The extractable gas for much of the Barnett Shale is estimated to exceed $1 million per acre (royalties may thus exceed $250,000 per acre). But operators are not obligated to drill so it may take a long time to recover the gas.

Note that this is just one guy's opinion about typical potential of royalties. Your situation may be quite different. For more info on assumptions, see "What's It Worth?" at enjoy it!. Let me know if this helps.

[39CHEVY]

Thanks for all the info DFF. I am aware of all the parameters that affect the royalties/well production but I thought it would be "fun" to hear some actual money coming in.
Kind of like thinking about winning the lottery if your well pans out.

Any one want to play the non-technical version of "Royalties".

[blueskies49]

My daughter and her family live in south Arlington by the Mansfield border. Last summer a well went up in their neighborhood and the ones who signed on, including her, received a one-time check of about $200. They then moved the well a little further away.

[muttmommie]

Originally Posted by blueskies49

My daughter and her family live in south Arlington by the Mansfield border. Last summer a well went up in their neighborhood and the ones who signed on, including her, received a one-time check of about $200. They then moved the well a little further away.

Your daughter must not have signed up with the neighborhood group that negotiated leases on behalf of the property owners. I believe SWAPO & SWAPO 2 members (SW Arlington Property Owners) received or will receive $17k per acre sign-on bonuses and 25% royalties.

[DFF]

Hey 39Chevy,

It doesn't look like anyone wants to play the game with you so far. So here is a derived estimate based on a typical well that produces 10 to 50 MMCF per month. (I looked up a few wells and that is about what the newer wells are doing in southeast Tarrant County.)

At $7 per MCF, the well produces $70,000 to $350,000 per month. Thus for a 1/4 acre lot in a 320 acre pool with one active well and with a 25% royalty, the typical royalty would be from $13 to $68 per month before taxes.

In an 80 acre pool, multiply by 4 ... 20 acre pool multiply by 16. I have not heard of anything better than an 80 acre pool so far. Thus the maximum anyone with a small lot is getting is probably about $250 per month. Most royalties are much nearer to $50 per month so don't plan to buy a new Chevy (or rebuild your antique one) with the proceeds unless you own some significant acreage.

Signing bonuses are now up to about $5000 for a lot. That is a nice chunk but you won't be rich.

When development is complete (sometime in the next 30 to 50 years) and all the wells are out of production (sometime in the next 40 to 60 years), the total sum of all payments, including all bonuses and royalties, to an average 1/4th acre lot owner may be up to $60,000. And that is only under the best lease terms currently being offered and these payments will likely be stretched out over about 50 years. Some with the worst leases may get as little as $25,000.

Doug

P.S.: I'm looking for a few good folks that have not signed a lease and would want to expedite their royalties and team up to double or triple the benefits from their minerals in this expedited process. That means an increase from $60,000 or so on a 1/4th acre lot to $120,000 or possibly even $180,000 in a period as short as the next 5 to 10 years. If you would like to explore this with me send me a message by clicking on my initials above. No obligation of course.

P.P.S.: This is only a potential if enough folks want to go forward so tell a friend about it if you can.

[Fountain]

Hi Guy's, Here is what Info I have. I guess i really screwed this whole thing up. I have 3.5 acres in Rendon/Mansfield off of Hwy 1187. I got $3,600.00 for signing a year and a half ago. Got my first royalty check today and here are the results. Vance Unit, XTO Energy They state my percentage is .001479170 I have no idea what that means. They sent the check in the amount of $4,110.51. The break down is as follows. $435.24 for July 2007, $645.56 August 2007', $461.66 Sept. 2007', $485.02 Oct. 2007', $467.74 Nov. 2007', $428.70 Dec. 2007', $396.12 Jan. 2008', $392.56 Feb 2008' & $397.91 March 2008'. They have misc. charges for Transportation & Gathering listed for each month and they give some gross numbers for value which i assume is for the well itself. These numbers are
around $361,124.04 to $559034.48 per month. i assume that's how much the well produced for that month. They also give you the numbers for GALS or MCF produced. If i can provide you any more information just ask. I think these guy's are slim balls and want to make sure everyone just gets their far share. You also have to give them your SS number at this point or they will automatically deduct 28% from you check for taxes which they state they will nut return to you in any event. Friendly people.

[loves2read]

fountain--
they follow the law--part of the law is to report to the government the amount of money they pay to someone with a mineral interest--it is just like casinos having to report people who win above a certain amount or self-employed people--a contractor will have to have your ss number to report what they pay you or they will have to deduct an "average" amount of income tax necessary to cover certain amount of earnings and then let you get back what you deserve when you file your income tax

what are you complaining about--you could have gotten more if you held out for signing bonus and may be a larger cut of royalty payout--but the deal is done--be glad they are not drilling or having a compressor station in your backyard...

[vinmar4]

What can youtell me about the pros and cons of buying a home with some land in the Rendon area?
I have 3 children.
Thanks a lot

[m00se]

Originally Posted by vinmar4

What can youtell me about the pros and cons of buying a home with some land in the Rendon area?
I have 3 children.
Thanks a lot

May be a bit late for you as far as mineral rights if the current owner elects to withhold those rights at time of sale.