Royalty Check

I’m a new bee…

Our royalty has gone from $200,000 a month to $35,000 a month in less than one year. When will it stabilize? Why has it be cut so much? Has any one else experienced this

3 well units, LaSalle Co. Eagle Ford Shale - EOG

That’s pretty normal decline from what I’ve seen in the Eagle Ford Shale oil window. I have interests in some EOG units and they’ve declined about the same. The decline rate should be slowing and will continue to do so, although decline will never stop altogether. My wells are about a year old and made almost exactly what they did the previous month on this last check.

This month our ck was about $1000 less than the month before. Would it be safe to assume we are starting to level off and how long would this level last before we start to see another increase in decline? Or is more like a slow decline for a number of years?

I think that would be a safe assumption. You should hopefully see a somewhat stable decline for years on those wells with anomalies now and then for wells being worked on. And then you may also get another boost off new wells at some point if the units aren't completely drilled yet. Pretty good outlook!

How would a person find out if the units were not completely drilled? We are having a hard time finding information about it there is a pump jack on the property and other information. Any help would be appreciated.

What are the unit names? I can look them up for you. You can send me a friend request if you'd rather discuss in private.

Is it available on the TRC website?

Here is an article on shale declines. In the numbers I had pulled prior to seeing this article, I had focused on oil production numbers in the Woodford shale. The oil numbers fell a bit quicker and further than the gas numbers shown here in my numbers, but the current Woodford horizontal play is still pretty young.

SDA - yes you can at least make an educated guess as to whether the unit is completely drilled using plats that are included with the drilling permits on the TX RRC website. If you are familiar with the drilling permit queries function you can search by your well names, API numbers, lease number, etc. and then look at the plat attached to each permit. It's not an exact science, but looking at the plat you can likely see if more wells will fit in the unit. For instance, if there are 3 wells on one half of a rectangular unit and none on the other then you could probably pretty safely assume that there could be more wells drilled on that other half. Like I said, it's not an exact science but it could give you some idea.

I had spoke with TRC a while back and they said according to our lease size, that they should be able to get at least 5 wells off one unit.

Currently we have 3 units with 2 well on each. How do you know when a pump jack has been installed and how do you know when another drill permit has been filed?

TRC said since we already had the lease agreement EOG did have to actually notify us if they were going to file for another well permit. On the TRC map it just saw that the lease next to ours who has producing wells is now showing a new well permit date 12/2014, this just showed up in the past month on the map. Is there a way to see a well permit when it's been filed, so we don' t have to wait until is shows on the map.

Before the invent of the tight oil industry just a few years ago Americans lucky enough to own minerals under their land were pretty savvy about all matters related to oil and natural gas. They understood risks operators take, the risk to reward aspect operators face, they were patient and comprehensive of production problems, downtime, problems associated with getting product to market and they were realistic about leasing terms and what to expect. They understood that reserves decline and along with that so does their royalty income. Royalty income was a wonderful bonus they received from owning, and working the land. They saved it knowing it would not last forever.

Now everyone thinks that if they have some tight oil shale under their land they are entitled to 5000 dollars an acre bonus and quick and prompt development of wells on 10 acre spacing, if they can get it. Its almost like, entitlement. Anybody that whines about going from 200K a month to 35K a month needs their head examined.

There is a world of information on the internet about tight oil decline, about estimated ultimate recovery for wells...the data is there, all you have to do is look for it. Quit believing all the crap the tight oil industry needs to say about reserves and the number of wells they can cram into a given unit; its all bunk. Will it ever stabilize? Yes. When each of those 8 million dollar oil wells become stripper wells making 10 BOPD. When your monthly income is 1400 dollars a month, bank on it for awhile. In the mean time, you are incredibly lucky to have gotten what you have. 99.9999999 % of the people in the world don't own minerals at all.

While the op is indeed very blessed to have reaped such a bountiful award, I do not believe that they forfeit the right to be concerned about decline. As far as there being information available, that is true. Yet not all of the information is copacetic and even oil industry advocates are often in disagreement.