Royalty & Production Figures from WV Northern Panhandle

An excellent article in Sunday’s The Intelligencer/Wheeling News-Register takes a look at production numbers for a sampling of natural gas and oil wells in the northern panhandle of West Virginia. Chock full of numbers, some of the gems include:

A single Chesapeake Energy well in Wetzel County produced 1.05 billion cubic feet of natural gas and 349 barrels of oil in 2011, according to the West Virginia Department of Environmental Protection.

By comparison, a Chesapeake well in Marshall County yielded a comparatively low 310 million cubic feet of gas and 1,137 barrels of oil last year, showing that production levels in the Northern Panhandle’s Marcellus Shale can vary quite a bit.

"Given that the wells cost $6 million to $7 million, the well revenues would have covered a significant portion of the capital cost. Also the mineral owner should be happy with the royalty check," said Tim Carr, Marshall Miller professor of energy at West Virginia University.*

We also see why drillers are flocking to the natural gas liquids areas of the Marcellus and Utica plays:

Information provided by Chesapeake shows that drilling in the wet gas areas found in the Northern Panhandle – loaded with ethane, propane, butane and pentane – has proven up to three times more profitable than drilling in Pennsylvania’s dry gas regions. For a typical dry gas well, the company earns about $13,000 in revenue per day. However, the company earns up to $38,800 in revenue each day for wet wells, company statistics show.*

And how much in royalties would landowners make in a given year on just dry gas for a single, high-producing well?

Based on the 2011 production of the Whiteman well in Wetzel County, which was 1.05 billion cubic feet of natural gas and 349 barrels of oil, with an estimated royalty rate of 17 percent on production and a natural gas price of $2 per mcf, the landowners in the drilling unit would have received $357,000 in royalty payments last year on the natural gas and $5,933 from the oil production, based on a price of $100 per barrel of oil. The natural gas royalty figure only considers for methane production, and not the possibility of any wet gas being part of the mix.*

There’s plenty more numbers in the article, which is well worth your time to read (click the link below).

*The Intelligencer/Wheeling News-Register (Jun 3, 2012) – Not All Wells Golden, Production Varies Across Panhandle