I own some small acreage in Sec 6 3N 4W. Marathon completed 2 wells in the area around Dec 2019. Starfox and McCloud. Everything I could find on the internet from industry newsletters said they were good wells. Obviously, Covid came around at just the wrong time for this.
In April, I got my first check on the wells. Very nice, reflecting sales made in Dec-2019 to Jan 2020. The bottom fell out in March. Got no more checks until about August. Since then, the checks have been up and down, but the oil portion sales shown on the checks have not been “considerable”, for lack of a better term.
At the start of the pandemic, I listened to some podcasts from a place called Macrovoices. Its a financial podcast by a former hedge fund manager named Erik Townsend. Its pretty technical, but they talked at length about oil during that time frame. He’d have guest experts, etc. They stated that modern horizontal wells could be more easily shut down during low-price periods, as opposed to older vertical wells. The consensus was that oil companies would shut down these wells where possible, waiting for better prices. Older wells that were shut down would not be easily recovered, leading to much higher oil prices when/if the economy fully recovered.
Obviously, my question here is whether to be optimistic that these wells may continue to be good sources of production in the future. Just wondered what some of the veterans ( M. Barnes- grin) think about the topic. You can probably hear the finger crossing going on right here.
Thank you for asking that question. I want to know, too. Fingers crossed here as well.
Some companies were fairly cautious in opening up wells in order to not waste too much revenue on “low prices”. Some of my wells are just fine, some came back on stronger and then tapered off to the predicted flows and some have been a sit spotty.
You can watch production on the OTC site for the last “12 months”. They are running a few months behind. Gross Production. Too soon to tell on these wells, so give it some time. They choked back in May and then opened back up someby July on Starfox. Same on McCloud.
You may want to change your Division Order minimum to $25 instead of the standard $100. That will get more frequent checks.
Wanted to post an update for anyone that might remember this question. I got an email image of the upcoming check stub from Marathon last night. This month the total is a little over double that of last month. The checks had been in the same range for 6 months or so.
Obviously good news. The sales are spilt among Gas, Natural Gas Liquids and Oil. Hoping this might be a pattern, but trying to stay grounded.
Now, I’m curious about a couple check stub things. They hold out some tax on this, roughly 5% of the “owner gross value” on the check total. There is also money held out for “owner adjustment”. This is roughly 25% of this “owner gross value”.
On the adjustment codes, it is primarily identified as interest. Just curious what that means, as its a substantial amount. Interest accrued due to borrowing to fund the well?
Chris- first thing I will address is your last sentence. No, they don’t borrow money from royalty owners to fund the drilling of wells. Without seeing your statement the interest may be, only a guess, because it is revenue that wasn’t paid within the first 180 days after first production.
Next is to see if the production date shows February. If so, notice the spike in price for natural gas. That’s a huge anomaly due to the big freeze. We won’t see those prices again.
So your next check will be considerably less than this check.
Good catch. Looking over the stub (which isn’t easy in email for me), the big chunk was for Natural Gas Liquids on 2-21. That would have been right on the heels of the freeze out, I believe. Guessing prices had ballooned, and their were able to sell on the high note.
Fine with me after having the Covid bust hit just as the well finished. Its like a teen-aged love affair in this game.
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