|
|
|
|
|
|
|
|
|
|
|
There are many benefits for being part of a well unit. The primary benefit is economic.
Landowners are entitled to 1/8 (12.5%) of gross well production, or what is known
as an override interest. Over the life of an oil well, even an average well, this
can amount to tens of thousands of dollars. The landowner who owns the property
where the well is located receives free natural gas in addition to his or her portion
of the royalties. Free natural gas will cover the landowners heating and other household
energy costs, which will add up to thousands of dollars in savings over the years
(see chart below).
|
|
|
|
|
 |
|
|
|
Amount
|
Description
|
|
200,000 MCF
|
Recoverable Gas Reserves
|
|
$7.00
|
Gas Price per MCF
|
|
12.5%
|
Landowner Royalty Percentage
|
|
$1,400,000
|
Gross Revenue
|
 |
| $175,000
|
Total Landowner Royalties (Life of Well)
|
|
|
|
 |
|
|
|
Amount
|
Description
|
|
250 MCF
|
Amount of Free Gas per Year
|
|
$14.00
|
Market Rate
|
|
$3500
|
Value of Gas per Year
|
|
|
|
$87,500
|
Amount of Free Gas over life of well (25 years)
|
|
|
|
Many landowners are happy to know that they can sell their property with or without
their mineral rights and their royalties. This means that landowners have the option
of continuing to receive oil and gas royalties even after they are no longer living
on the property. If the landowner decides not to keep the mineral rights, the royalties
can serve as an incentive to potential buyers in the sale of the property. |
|
|
|
|
|
|
|
|
2011 Cutter Oil Company |
|
|
|