35 MCFD is only 35 thousand cubic feet of gas a day, a trivial and uneconomic volume. Assuming you actually meant 35 MMCFD that is million cubic feet a day, the gross revenue before drilling and operating costs, royalty, severance and income taxes, overhead and other expenses would be $51.1 MM annually. I’ll let others on this forum comment on the payout time.
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Note that I posted 35 MMCF (Million) and not 35 MCF per day. My $64,000 per day net includes deductions for royalty payments, severance taxes, LOE / operating costs.
I did not include ad valorem taxes as well as corporate overhead expenses
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I think the obvious thing that comes to mind is 35 MCF/day flat is very wishful thinking for a 13 month period. The second thing would be what is looks like for the operator vs what it looks like from a mineral owners standpoint. We all on this forum know that Henry Hub pricing is far from what the mineral owners are receiving each month. A lot of leases signed in this area have not had No-Deduction clauses in them etc. This will create quite an issue when the owner believe he is going to be getting a certain price and his check and when that check shows up someday, it’s a completely different story.
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There are supposedly several wells in the Marquez area that have not had hardly any decline in production I’ve seen on the Internet. I think the Dinkins was one of them. I could be wrong and usually are! They are the Comstock Western Haynesville wells (Bossier also).
Thank you Sir! It is critical for mineral owners to have the right lease to address post production cost. A cost free royalty is hard to get and define according to Texas Law that has already been through the Texas Supreme Court. The Case was Heritage Resources v. NationsBank, 939 S.W.2d 118 (Tex. 1996) according to an article I read several year’s ago. I hope this helps everyone.
Lots of moving parts as to the financials associated with these super deep, super hot, super expensive massive rate gas wells.
The operator vs royalty owner is a good viewpoint to address. I don’t think that cost free leases eliminate what the operator is being charged by midstream gathering groups to accept and transfer / move the gas in their pipelines (but I may be wrong).
I understand your comment @ 35 MMCF per day flat for 13 months, but it is clear that many of these wells are being choked back once they come on line and are still making huge gas rates. I believe that many of these wells are producing at some pretty flat rates over time.
These are not your typical “high rate of decline” post frac wells that we see in other areas.
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