PEOPLE WANT TO KNOW…
What does it cost?
Your cost for a 40 acre lease is $50,000. We bid on leases in increments of 40 acres: 40/80/160/320/640.
What is my typical potential royalty? (without future potential development)
Typical (3%/4%) monthly override royalties over a ten year period (per 40 acres) vary from $500,000 to $1,000,000. (based on 24/32 horizontal wells with initial potential production per well of 500/1,000 barrels per day-based on you accepting a pooled acreage royalty)
Potential Revenue Timeline:
Year Revenue
First $50,000 - $200,000 *
Second $100,000 - $200,000 *
Third $100,000 - $200,000 *
Fourth $100,000 - $150,000 *
Fifth $50,000 - $100,000 *
Sixth $40,000 - $70,000 *
Seventh $24,000 - $45,000 *
Eighth $7,500 - $15,000 *
Ninth $5,000 - $10,000 *
Tenth $5,000 - $10,000 *
*This estimate does not include potential for any future development. All royalties are paid in perpetuity.
This means that if an oil company goes back in on year six (example) and redevelops the acreage, your royalties could begin again at the second or third year levels and will be paid to you as long as the lease remains in production.
More you need to know:
Buzzico exclusively purchases State and Federal Oil and Gas leases at auction in Colorado and Wyoming only. Our experienced geologist does an in-depth analysis on every lease before we go to auction.
Wyoming and Colorado oil is sweet crude—closer in quality and value to Brent than West Texas Intermediate. Natural Gas is also a regular by-product—more profit to you. Wyoming and Colorado sandstone, limestone and other formations generally cost $50 to $75 a foot to drill. Shale wells in North Dakota and the Permian Basin cost $150 to $200 a food to drill. Wyoming and Colorado produces a higher quality/more valuable oil (and frequent natural gas) for lower production costs due to quality of oil and established infrastructure close to refineries.
Buzzico only bids on leases adjacent on one or more sides to current successful production. These adjacent leases typically have 24/32 approved horizontal drilling permits in place. (Once a horizontal project has been permitted, the first horizontal well must be drilled within 12 months of the approval date.)
Oil companies are committed once they are permitted. Per 960/1280 acre the average horizontal well project costs $15/$20 million to frack 24/32 horizontal wells. When small, adjacent leases put up for auction oil companies want to block the competition from acquiring the lease. Horizontal drilling projects need to protect and preserve adjacent drilling rights in order to prevent the competition from drilling near them.