Martha, is this calculation correct based on $25.00/Barrel of oil and $1.88 natural gas, given 285 barrels of oil per day and 706 of gas? Perforation is 40.7216 and royalty of 3/16.
706 x 1.88 x 30 Days/Mo = $39,818.40 x 0.1252666 (perforation) = $4,775.66/per month gas
285 x $25.00 x 30 Days/Mo = $213,750 x 0.1252666 (perforation) = $26,775.00/per month oil
I must have something wrong??
Martha, is this calculation correct based on $25.00/Barrel of oil and $1.88 natural gas, given 285 barrels of oil per day and 706 of gas? Perforation is 40.7216 and royalty of 3/16.
706 x 1.88 x 30 Days/Mo = $39,818.40 x 0.1252666 (perforation) = $4,775.66/per month gas
285 x $25.00 x 30 Days/Mo = $213,750 x 0.1252666 (perforation) = $26,775.00/per month oil
You need to calculate the decimal interest first from the Division Order.
Net acres/spacing acres x royalty x percentage of perforations.
For example. 10 acres at 3/16ths royalty and 40.7216 perforations percent.
10/640 x .1875 x .407216=0.00119302. For every dollar the well makes, this is the decimal credited to the 10 acres minus taxes and any post production charges that your lease allowed (hopefully none).
As a guestimate to keep numbers rounded…
700 x 30 days x $1.88 = $39,480 gross gas income for the whole well
285 x 30 days x $25.00= $213,750 gross oil income for the whole well
Total for the month is $253,230 x decimal amount (0.00119302-your portion) =$302.11 for that month only. Starting point.
Minus 7% OK production tax ($21.15) minus Ok personal tax minus federal tax. I am going to guess at 7% OK and 23% federal to keep numbers easy ($90.63) gives about $190 for the month for the 10 acres. if your lease has post production charges, then you will lose even more.
Note: you can claim ~15% depletion on the federal tax (check with your accountant), so you get some of the money back in depletion credit.
Note: Each operator has contracts for their gas and oil, so you can’t really judge by the gas and oil prices you see quoted in the news. Usually, OK has lower prices.
Note: The first few months of production are the highest volume that you will see. It will begin to decline rapidly, so don’t count on it staying at the original rates. The oil and gas prices change every month, so that is also an unknown.
This is just an estimate to show you how it is calculated. Yours may vary due to the number of acres you have, the terms of your lease, price of oil and gas, actual production, etc. You also may get paid on natural gas liquids which have a different pricing.
Martha- it won’t matter much to the calculations, but new horizontal wells only pay 5% for the first 4 years, then reverts to 7%. So these wells only pay 5% gross production until 2/203.
Contracted gas prices are only about 80-85% of posted prices so mineral owners would be lucky to get $1.50/mmcf for gas. Same for oil.
Good explanation though, as most people trying to figure out what they will get in the form of checks always forget about the the state tax man who gets his first. The federal tax man is another story.
Yes, the tax rate is 5% for the first three years (I just checked the tax site for that Great Plains well 2-2020 to 2-2023) and then it reverts to 7%-unless they change the rate again. I was going for the long time life of the well, so didn’t mention it. If you live out of state from OK, you might get a partial refund on the OK taxes. If you live in state, that is another matter. Gets complicated.
But the basic idea is that posted prices are usually higher than actual prices, taxes come out first and wells decline quickly. So plan accordingly.
I knew my calculation was too good to be true.
I live in TX and with my old Sheridan well they took out something but since I lived out of state I filed an Oklahoma return and got almost all of it back. As far as what I get that is a sad situation.