Desert Mountain Energy Corp V.DME

Royalties and Expect loss

[tylerod1]

So i'm working up a new chart and i was wondering if anyone here could help me with some questions. 

Loss= Helium on well 4 is 1.1370%. During extraction and processing i would expect there to be some loss involved. Anyone have a good generalized figure i can apply to this for forecasting purposes? 

Royalties= Arizona BLM says the following below in italic. I have two questions.  Wasn't there a private land owner royalty in addition? I believe i read 16% total here prior but i'm not sure. 
Second quetion, Are royalties taken from the cumulative recoverable/valuable gas or is it 16% for each individual gas? 

Flow Rates = If a well has a flow rate of 1251 MCFGPD would you expect them to process it at that speed? a lesser speed? Is there a % value i can generically apply here? 

• If a discovery (oil, natural gas, helium, CO2) is made, the lessee will pay a royalty to the Land Department of 12.5% of the gross value of the production.

[Tubes101]

Have a look at notes 7a it will give you the %. Page 22  https://www.sedar.com/GetFile.do?lang=EN&docClass=5&issuerNo=00027110&issuerType=03&projectNo=03332792&docId=5125757

[Buyhigheatchips]

Last we heard the max throughput of the plant is 10000 MCF/d correct?

[tylerod1]

10 mmcf or 10000mcf...basically enough to handle the pressure of 7 wells like well #4

[Bertie20]

On the private landowner royalty question, there definitely was one but I don't have the number to hand. However, with the company purchasing the surface rights for their current wells at the Macaulay field, perhaps there will be no royalties for that portion of production? 

[tylerod1]

DM confirmed in email that total royalties and taxes come out to around 21% on the crude value. Not proceesed value.

[Bertie20]

Thanks tylerod. That's a very important distinction and answers one of my burning questions. If the royalty is based on the crude price, DME's  decision to self-refine the helium and sell it for the much higher price looks even better. 

[Buyhigheatchips]

At what point in the processing is the gas "crude"? Is it at an intermediate step when the gas is 50% He?

[tylerod1]

If i understand it correctly you would take 21% of the gross amount of helium extracted. Let's say they pull 1000MCF helium annually. They would be requred to pay the equivelant of 210MCF @ the 275$ crude price.  Basic example ARIZONA NETS 1000MCF x 21% = 210MC              210 MCF x 275$ = $57,750 DME NETS 1000MCF x 1200MCF = $1,200,000

[tylerod1]

Sorry this was slightly confusing. 21% is the total royalties for state and private + taxes.  12.5% is state tax only.