Mark.. There are numerous factors to consider, and thus no clear answer for your spreadsheet.
> How long would you say the ROYL wells you participate in will produce? <
Consider taxes.. you get a tax break if you participate as a "Direct Working Interest" investor. This means that someone in a 38% tax bracket recoups their investment faster than those in the 28% tax bracket.
Consider the history of the field where the drilling occurs. Past preformance can give clues to the length and quantities of production that may be expected. Royale drills mainly in the Sacramento basin of California, and among the fields already proven, using the new 2D and 3D seismic to find gas deposits left undiscovered before the new technology was invented. One well I'm in, the Bowerbank 5B, has about 6 zones of gas, and they are pumping from the lower one, and will go to the others one by one, and I've heard figures on 12 -16 years longevity mentioned.. no guarantee however.
Generally, the deeper wells also have longer and higher production, but a company can produce (pump) gas from multiple zones at the same time, thus increasing production but decreasing longevity of a well. Also, other wells could be pumping from the same pool of gas, and depleting it too. Some wells may be constrained by the gathering pipeling structure, which limits the flow into the market also. Deeper wells cost more to drill, and cost increases geometrically as the depth increases. It may also take about 4 - 6 months of real production to get a good estimate of reserves for a well, as they monitor production and pressures over time.
Many factors to consider.. I think you might consider a small stock purchase of Royale or another company and invest with the company, as they participate in these wells along with the direct working interest investors.. Royale E generally retains about a 35% interest or so.. this will allow you to participate in the biz without investing in a major way as you learn.
Due diligence is recommended, and read all the material you can get your hands on.. Royale has a newsletter, which generally features information on gas drilling, seismic and other topics. Try their web site or call Jack Connelly, a very helpful and patient person at investor relations.
Wayne |
