Name: Another Lower 48 survival tactic: drilling zero royalty minerals
Brand: Wood Mackenzie
SKU: 46102
Price: 1350 USD
Availability: OnlineOnly
Author: Wood Mackenzie

Insight 04 May 2016

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Report summary

The continued drive to discover economic drilling projects in the US has led to a renewed operational strategy for some producers – drill the acreage where they own mineral rights as a form of competitive advantage against their peers. In this situation, the E&P pays zero landowner royalty, setting themselves up to generate superior returns to their offset peers. For example, the removal of a 20% royalty reduces breakeven prices by between 17 and 23%. New company structures could emerge to capitalise on this.

Summary and background
E&Ps owning minerals
- Perspective: Canada's strategy of royalty land monetisation
Differentiated project metrics
- Case 1: Seneca over performing
- Case 2: Chevron performing on par
- Case 3: BP making up ground
  - Detail on BP's early Haynesville activity: Wood Mackenzie North America Well Analysis Tool
  - Actual activity outliers
  - Merging two models into one tactic
    - Appendix: Zero royalty company-asset files

Tables and charts

This report includes the following images and tables:

Seneca breakevens exceed averagesChevron close to AverageAnother Lower 48 survival tactic: drilling zero royalty minerals: Image 3

BP's early wells place its metrics below the current averageHaynesville permits grantedAnother Lower 48 survival tactic: drilling zero royalty minerals: Table 1