We have a lease on this property Sec 7,15N, 23W that was signed in 2024 and it had a big lease bonus, but haven’t recieved any royalties yet. I’ve heard that someone is drilling there and the horizontal going the other direction was very productive, so I’m hoping that the horizontal now drilling on my lease will be equally productive.
We have a relative that is on hard times and wondering what the prospects are for getting some decent royalties on this property? The interest is 3/16th
They should probably entertain offers to sell or sell a portion. Most people who’ve never received revenue off minerals would be surprised at how the monthly cashflow pales in comparison to a legit purchase offer, even if the well is big. If it’s an offer from a legit company it will take years for the buyer to recoup their investment.
Maybe go to www. shalexp . com/oklahoma/properties and find the name of the nearby well to see how much it has produced and the site’s Valuation Estimate for a 0.05 decimal interest in the well. Remember multiple wells could be drilled. Your relative might be able to get a loan on future production which would allow him/her to get through the hard times without selling the minerals. I am not giving any financial or legal advice with part of this reply.
Maybe go to www. Active Oil and Gas Properties in Oklahoma and find the name of the nearby well to see how much it has produced and the site’s Valuation Estimate for a 0.05 decimal interest in the well. Remember multiple wells could be drilled. Your relative might be able to get a loan on future production which would allow him/her to get through the hard times without selling the minerals. I am not giving any financial or legal advice with part of this reply.
Benchmark Energy spud the Waterloo 7-18 15N-23W mid- December. It will typically take about four-five months to drill and complete if a frac crew is available. You can watch for the frac job on www.frac-focus.org. Then it will be about five months before a division order is sent. Payment is six months after completion.
The likelihood of infill wells is fairly high, so good idea to hang onto the acreage if possible. This is a new Cherokee play and they have not had that many completed and online close by yet. Quite a few permits and rigs running, so that is good. Upland just drilled the Easy Come Easy Go 1-36 well in 2025 in Sec 1/36 just to the west, so a good well for comparison. Estimated EUR (Estimated ultimate recoverable) is 2.960 BCF gas and about 470,000 bbls of oil. It has been online for about a year and recovered 738,032 mcf of gas and 138,372 bbls oil. With gas at $3.00, that would be about $2,214,096 for gas and oil at $60 $8,302,320 for oil (Estimate only) So a total of $10,516,416 x 0.00146484=$15,404. The volume will decline year on year and the prices would change, but this is only to give an idea.
The formula for the decimal in OK is net acres/actual spacing acres x royalty x percentages of perfs in your section. This is a two section well but each section is spaced at 640. So an example would be 10 acres at 640 acres x .175 x .50=0.00146484. Eight decimal points accounts for every penny of every $1 million sold. This well will have about 5000’ of perforations in each section. Every million dollars will give $1464.84 for 10 acres at 3/16ths.
The first check will be for about six months of production and every check after that will be for a month.
The math is helpful. Do you have a similar calculation for the big Texas activity in the Western Haynesville area (Freestone and Leon counties)? I would like to try and create a spreadsheet to calculate royalty payments utilizing multiple variables (acreage, % royalties, production estimates, gas price, etc.).
No, I mostly focus in OK. Someone in Texas may have something. Same general principles apply but Texas equations differ a it on how acres are allocated. Allocation wells or pooling wells. Definitions are a bit different. Gas prices are quite different in Texas due to pipeline capacity.
Different ball game. The minerals mentioned in this thread would trade for 3500-4500/NMA, where minerals near regulatory in Leon/ Freestone can and do fetch 7-10x that number. Largely because the well density is much higher in W HV compared to a projected density of 2 wells in the “Cherokee” shale as it stands. Aka you can drill more wells per DSU in W HV/ Bossier than you can in what they are calling the Cherokee in W OK.
You can prob just plug some of these factors into Chatgpt and it will give you an estimate that will be accurate as any napkin math we’re talking about without referencing specific offsetting wells.
Martha, thanks for this great analysis and calculations. Are your numbers annual numbers? And thanks for the timing expectations as well. This is very helpful and gives us some good rough ideas of what and when to expect.
The Upland well numbers were for the life of the well with an estimated price for oil and gas. We know those change minute to minute. In general, horizontal wells give up about half of their value in the first three or so years. Then they taper off and can go for decades. The upside is more infill wells or refrac of the original parent well as technology improves. Time will tell on that piece.