How is gas revenue figured ,I understand for oil, but have never figured how to do gas. Thanks, Martin
Gas is paid by BTU value. It is usually split out into dry gas (methane) and the plant products or wetter gases (ethane, butane, iso-butane, pentane). Some companies lump everything into a “gas” line on the statements and some companies will break them out into “gas” and “plant products”. To add even more challenge, methan is paid by MCF (million cubic feet) and plant products are sold by gallons. There are some conversion equations to normalize it.
Okay, It said gas is measured MCF ( thousand cubic feet) produced. Do I multiply the MCF times the market price then times my R.I. ? Am I correct?
The equation for royalties is net mineral acres/actual spacing acres x royalty x % perforations in your section to get the decimal amount on the checks. You use the decimal against the gross revenue by the operator by product-deductions allowed by your lease for post production charges, taxes, etc. What you see posted on websites for WTI and oil and Henry Hub gas is not what your operator is getting paid month to month.
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Thank you greatly. Martin