There are several variable factors, including monthly production, BTU condition, the current price of gas, contract percentage, waste, and specific gatherer methods of calculation, which can affect the net amount received by the Joint Venture (JV) on gas investments.
Periodically, the gas production from a well is assigned a BTU, or grade, by the gas gatherer. The higher the BTU, the higher the gross dollar amount received [BTU x Thousand Cubic Feet (MCF) = Million British Thermal Units (MMBTU)]. Additionally, the price of gas will fluctuate each month, typically based on a factor of the daily Houston Ship Channel index.
Based on a negotiated contract with the respective gathering company for each separate Joint Venture, the net dollar amount received by the JV ranges from 75% to 85%. The gatherer’s share covers expenses such as line use, collection fees, etc. Some companies take a flat fee, while others make multiple itemized deductions, resulting in the same 75% - 85% net.
Calculating Your Profit from Gas Settlements
After receiving a gatherer’s detailed statement, our Accounting Department takes the net dollar amount received from the gatherer and divides it by the total monthly sales from the well. The result is an average dollar per MCF received, reported on Venturers’ Joint Interest Billing (JIB) statements.
We hope you’ve found this information about the language and numbers used in most Oil and Gas Settlement Statements helpful. Crown Exploration’s team is always happy to help our Venturers understand their statements and any questions you may have. Visit our Contact Us page to get in touch.
Crown Exploration II, Ltd. assumes no responsibility or liability for any errors or omissions in the content of this document. The information contained in the explanation is provided for educational purposes only with no guarantees of completeness, accuracy, usefulness or timeliness.