Oil well and longevity

[texas bandman]

I wondered if any of you guys know anything about oil output from new oil wells and their longevity. My mother in law leased 80 acres of mineral rights in Oklahoma right before she passed away in 2011. This summer we suddenly receive a large royalty payment from this lease and it has made my wife and I consider retiring. We were planning on retiring in 3 more school years, but if this lease continues to produce at its current levels, we could retire at the end of this year and not have to face another year in the classroom (I've taught 31 years and my wife 30 years).

My question is can you predict how long a well will produce and how much reduction should we see in the production through time? We will be using much of this money to put our two sons through college and would hate to have to struggle to make tuition payments, but I'd really like to never have to take a hundred band members on yellow dogs to a football game again!!!!

I'm hoping that some of you will have some insight into this as my music education degree from OU didn't prepare me to be an oil baron. :D

[Jacie]

Congratulations!

Now the reality, that first check was big and maybe your well is making 100+ barrels of oil per day (bopd), but I kinda doubt that.

It has been my experience that the first check was always the largest and they went down from there. The checks will level off, if it is a decent well, which can last for decades in some cases (there is a well in Stephens county that is named after my family completed in 1930 and still produces) though not usually.

In any event, I don't know of anyone who ties their retirement to the output of a single well.

[KantoSooner]

Absolutely no way to predict in general. On your specific well, a geologist/reservoir engineer might be able to give you a pretty decent idea...assuming he/she's familiar with the field and nothing unexpected (new wells, etc) happens. You might want to see if there is an independent lease operator in the area with whom you can talk.
Until then, enjoy that check, but don't count on the next one.

[texas bandman]

Congratulations!

Now the reality, that first check was big and maybe your well is making 100+ barrels of oil per day (bopd), but I kinda doubt that.

It has been my experience that the first check was always the largest and they went down from there. The checks will level off, if it is a decent well, which can last for decades in some cases (there is a well in Stephens county that is named after my family completed in 1930 and still produces) though not usually.

In any event, I don't know of anyone who ties their retirement to the output of a single well.

We've got our teacher retirement and 403b's as the primary source of income and will be able to replace our preretirement income with these and have taxable accounts to pay for our boys college, but this well payed what my wife and I make in a year in the first 4 months of production and the next month was slighly over a quarter of our salary. We just are thinking about retiring early since we have have this extra income and didn't know if the well would produce for a year or less. Like I said I'm a musician and know absolutely nothing abou the petroleum industry.

[rock on sooner]

We've got our teacher retirement and 403b's as the primary source of income and will be able to replace our preretirement income with these and have taxable accounts to pay for our boys college, but this well payed what my wife and I make in a year in the first 4 months of production and the next month was slighly over a quarter of our salary. We just are thinking about retiring early since we have have this extra income and didn't know if the well would produce for a year or less. Like I said I'm a musician and know absolutely nothing abou the petroleum industry.

Great quandary to have but if it were me, I'd do the research suggested and keep
working for two more years and squirrel away the royalty in diversified blue chip stocks.
After that, then I'd consider looooooong vacations and trips to all Sooner road games!

[olevetonahill]

We've got our teacher retirement and 403b's as the primary source of income and will be able to replace our preretirement income with these and have taxable accounts to pay for our boys college, but this well payed what my wife and I make in a year in the first 4 months of production and the next month was slighly over a quarter of our salary. We just are thinking about retiring early since we have have this extra income and didn't know if the well would produce for a year or less. Like I said I'm a musician and know absolutely nothing abou the petroleum industry.

I dont know jack all about it, But My little piece of the Oil business Paid pretty decent for the 1st 8 month period then it dropped to 25% for the next 4 months Now its down even further.

I'd say Just Bank it then when your sure enough about yer retirement tell em to

http://www.youtube.com/watch?v=EzGoDtmTllg

[texas bandman]

I dont know jack all about it, But My little piece of the Oil business Paid pretty decent for the 1st 8 month period then it dropped to 25% for the next 4 months Now its down even further.

I'd say Just Bank it then when your sure enough about yer retirement tell em to

http://www.youtube.com/watch?v=EzGoDtmTllg

Yep, that'll be a day I've been waiting for expectantly for years!

[texas bandman]

Just read an article on the area where the well is located. It's right in the middle of the South Central Oklahoma Oil Province in Stephens county. I hope this is a good thing.

[KantoSooner]

Stephens County has been drilled since my grandfather's youth. Not a bad thing, but it adds to the complexity of trying to forecast your well's future. (in addition to everything else, that production might not be 'commercial' if the world price of crude drops...as it might). I wouldn't bank on future income.