I own mineral rights in Ellis county OK. which has two active natural gas wells.could someone explain avg. price and owner volume.the 05/15/2019 stub shows avg.price 55.8600 & owner volume 181.45.that check was $1308.82.the 06/15/2019 avg.price 3.0400 & volume 5271.00.that check was $451.05.how can the avg.price vary from 55.86 one month to 3.04 the next month?also,the check with owner volume of 5271.00 was smaller than the volume 181.45? I have searched the net for a better explanation of check stubs but no joy.thanks in advance for any information.
George: More than likely you are confusing the price of oil ($55.86) with the price of Natural Gas ($3.04) Read the check stub more carefully. Also depending on the Payor, you should be able to go to their website and search for their explanation of check stub entries.
Hope this helps.
Todd M. Baker
George Mcnaught: the $1308.82 check was probably for Oil only sold thru 5/15/2019 at $55.86 per barrel. The $451.45 check was probably for Natural Gas only sold thru 6/15/2019 at $3.0400 per MCF (thousand cubic foot).
Some of my wells in Oklahoma pay me royalties every few months with Oil sold by the operator to one company and a separate check for Natural Gas sold by the operator to another company then rarely Condensate by the barrel usually together with the Gas buyer. Other Operators of wells sell both Oil & Gas to buyers and combine royalty payments on one check to me.
Oil from lower producing wells is frequently stored in large tanks located at the well location and hauled away by trucks or railroad tank cars to the buyers when the tanks are full. This can occur daily, weekly, monthly or even every few months depending on the volume in barrels produced by the well. Operators can even cut down or stop the wells production of Oil if the buyers price is low and the operator thinks that it will increase in the future. In other words the oil can stay in the ground until pumped or allowed to naturally flow to the surface to be stored or sold.
Natural gas is almost always connected by pipelines that allow the collected gas to be transported to some collectors or buyers location where it is sold by the thousand cubic foot (MCF). It too may be cut back or stopped by the Operator if the price is too low.
Sometimes when a well produces both Oil & Gas in sufficient quantities and the price of the Oil or Gas is high enough, the natural Gas pressure is only sufficient to bring up a given amount of Oil. This only happens with Oil wells that flow naturally and the Oil is not “pumped” out.
If no Gas buyer needs (summer time need is lower than winters) or is willing to pay the sellers price the gas can be stored (usually by the buyer) in giant tanks, until needed, or burned (flared off) by the Operating company. State laws regulate this flaring and the gas cannot be simply released into the open air. At this time there are some Texas wells producing natural gas that is so unwanted that the Operators pay the buyers to take their Gas. This may result in negative net pay to the mineral owners.
I was under the impression both wells were gas only. now I see both wells are producing both.the lower check was for gas only while the larger check was for gas and oil.Its all starting to make sense now.