Charles Newman, an attorney with Landamerica Title recently spoke to a group of Realtors in Arlington and shared some very interesting numbers as far as the true value of mineral rights after the gas companies start producing from the well. I have seen many buyers and sellers recently that are expecting a major financial windfall from their lease and this might help quantify what someone could expect..
BARNETT SHALE PRODUCTION PROJECT
Premise: A well produces 2,400,000 cubic feet per day for the first year; production drops in half in second year and to 300,000 cubic feet per day for years 3, 4, and 5. Gas valued at $7.00 mcf.
Monthly royalty of 25% for a 1/3 acre lot in a 400 acre pool.
First year - $105.00/month
Second year - $42.00/month
Third then Fifth year - $13.00/month
TOTAL for 5 years: $2,232.00
If natural gas sold for $9.00 for the 5 years period;
TOTAL would be: $3,033.50
Thursday, March 06, 2008
What are mineral rights really worth?
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2 comments:
Can you use the American Mathematics Institute's recognized formula for caculating the production units per month in cubic measurements on a bi weekly basis? Thank you.
This is all really complicated for me. If I can get the dollar amount I will be receiving on a daily basis, I could work that into my budget. And if you could prorate the amount I will be receiving in 2008 based on the amount of months that the wells will be producing that would be helpful also.
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