I picked up fractional interest in a series of Gas wells back in August.

The performing wells are located in Fayette County in Pa and another group of wells located just across the boarder in Northern WV. With all the doom and gloom in the rental housing industry, I used these purchases as part of one of my 1031 exchanges.

These wells perform at between 9 - 12% cap rate but unlike housing units - there is no participation in this investment. You strictly receive ACH payments for the next 30 or so years.

In early August natural gas prices were at about $ 2.10. This purchase was part of a larger plan of mine to become less involved in my investments and more free. Before the election the election they had edged upward to $ 3.35. My investment grew roughly 50% in value and I was stoked ...... since the projected winner of the election said he would stop all new fracking, I figured the value of existing wells would skyrocket.

Well something strange is happening. The price of gas has actually went down to $3.03. I am not sure why the decrease in price. I am inclined to believe that prices will remain high - which means my monthly deposits also go up the a same rate. I think it is wise to bounce this off the membership for your input. What do you see as the future pricing of Natural Gas?

It's a mix of market and what the well in particular pooling

units produce.

I retained the gas rights on two houses that I flipped that were side-by-side. They both had about 3 1/2 acres total. I was gettong between 12 and $1400 a month in royalties for about two years from this property and then it dropped way down. Now I get about $200 to $300 a month off of this parcel.

Every once in a while, you will see the price shoot back up for a bit and that can either be from the demand or it can be from the gas company re-fracking well and increasing the output.

So you'll often times see high royalties for a while in the beginning of the well and then it'll drop down but it'll stay consistent at that lower price for a very very long time.

Personally, I would not buy a property just based on what its gas royalties are doing because it's anyones guess what will happen, but that's just me. It is to much hit or miss for my liking. But on the other hand, I do absolutely keep the gas rights on every property that I sell if it all possible. And after a while, the checks do add up. I consider it money from heaven.

It is nothing for a farmer with two or 300 acres around here to pull in $30,000 a month.

Nicole, there is an investor here who I hunt with in the fall. He organized the majority of the leases for this area. Super brilliant man. He and another investor target flipping real estate with the intentions of stripping the existing gas leases off the properties.

So they flip the property for a profit, house with a few acres up to 20-30-40 acre farms and keep the royalties at closing. Those royalties are GRAVY.

Its been very warm all over the country since we are now re entering Solar Maximum. Big sunspots throwing out the red spectrum rays that heat the atmosphere.

Basic science: NG is the cleanest, most environmentally friendly of all the fossil fuels. Coal is the worst. I believe B will continue the ongoing process of replacing coal fired electricity generation with NG, increasing demand and perpetuating Ray and NE's fat royalty checks.

Thank you for the updated information Ray.

I don't really know how this works but, if you own an interest in something, then shouldn't you have a board or something that should be keeping you updated? I don't even know how to ask the question.

I am probably thinking completely wrong on that.

Is there a limit to invest in this?

NE, can you explain to me how that works?

Once you sold the house, did you have someone come in with a well and start pumping gas and then pay you a royalty?

Would the new owner of the house not still on the land that the equipment is on?

Do they get paid for use of the land?

6 x 6, in very simplistic terms, a well is drilled on a parcel of land somewhere and there is a radius around that well that captures gas from the fracking process. The land above that radius falls into what is called a pooling unit. If you buy a piece of property and sell the property, you can sell it in it's entirety or you can keep the gas rights underneath it or you can keep hunting rights for life or you can keep fishing rights or firewood rights, anything really that you want. In my area, I keep the gas rights whether they are producing or not because they might be producing 10 years from now.

Thank you NE.

So, do you get a type of deed at closing?

Is it for life or until you sell that right?

Most of the pooling units are leased by one or two gas companies. They will look up who owns the land in the area and whether or not that landowner has the gas rights. So I only's gas rates forever until I sell them or my LLC is dissolved.

Most of the pooling units are leased by one or two gas companies. They will look up who owns the land in the area and whether or not that landowner has the gas rights. So I only's gas rates forever until I sell them or my LLC is dissolved.

Ray, how do you know if they are paying you accurately?

I mean, do they give you a report as to how much gas was pumped? Produced? Sold?

How do you verify that?

Thank you NE. I appreciate you explaining that.

WOW, $180,000. So, at some point, someone did some verifying somehow.

My uncle did. He hadn't to dig back through the wording of the leases and show that unit price is linked to the way things are sold, etc. What happened was something along the line of the gas company selling the units to another company that they owned and THEN selling them on the open market, bypassing paying a higher royalty. (Paraphrased of course, but you get the idea)

I do enjoy the royalties that I get, however it is not worth my time to dig into mine to chase the little amounts I might be losing to things like this.

Do I spend countless hours to find 50 bucks a month?

It wasn't that long ago when "Shallionaires" suddenly cropped up over night around here. Farmers who had land that was selling for $1,800 an acre were being offered $3,900 an acre just for the mineral rights only.

Turned out that Marcellus formation wasn't wide enough this far north so as quickly as it came - it passed us on by. Well the next formation down is the Utica and it wide enough.

It is not as good as Butler or Greene Counties but it is still valid.

Chevron had the initial bite at these wells and they were awesome when they were first drilled. Chevron pulled out after the well got to the stable production level. The company that has the staff geologist picked this up and sells off small pieces so people can complete the 1031 exchange. Leave it to me to take a larger bit of the apple.

Someone states repeatedly on video that he will end fracking, that he will phase out all fossil fuels. He then states on video that he will not end fracking and that he never said he would. What statement do you believe??

Amen.

NG as a commodity is sold on futures similar to stocks. It could be related to the overall market fluctuations when Phizer did their media release that made the market go bonkers on last Monday.

MikeA,

Excellent Question.....

About ten years ago I rented office space to a geologist. He was with me for about six years . I gave the guy $1,500 and asked him to review what the area surrounding the wells looked like and what his opinion was on what he expected production to be. He gave me a thumbs up on this pick so I ran with.

To give everyone an idea of the numbers that are occurring, back when gas was at $2.10, the $100,000 investment was paying $850 or so each month. It required absolutely no management, no phone calls and no excuses about being unable to pay.

I haven't gotten a feel for the what the new rate represents monthly. I am thinking it should be about 40% higher.

I am not really looking for a gold digger.

I am looking for someone independent with a coconut on her shoulders. Meeting people in a pandemic in the sticks isn't easy.

Many power plants are slit fuel. They can burn coal or natural gas. Coal tends to be cheaper but it is much dirtier. It takes a while to bring the plant up to a certain level when using coal.

It is my understanding that with natural gas, you can supplement the plant so it can keep up with peaks in demand.

So a plant my end up being set up to run the core system with 60% coal and 40% gas. If the plant doesn't need to produce as much electric say because the end of first and second shift occurred, they can shift back to just coal. Or if it is a rather hot day and there is a peak demand due to the need for additional AC -the natural gas is already in the pipeline headed there. For coal, you might need to wait for the next train to arrive to have extra coal.