Figuring royalty on cross-lateral units

by S S

Jul 15, 2017

How are they figuring or going to figure the royalty payments when they drill cross-lateral units?  How will the royalty owner know what he is due?  How will that affect the royalty already received on a well drilled in one of the units?  I have a 160 acre interest in a unit that has a gas well on it and want to know how I'll be affected should they decide to include that unit in a cross-lateral.

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    Skip Peel - Mineral Consultant

    Cross Unit Lateral wells, the state denotes them with "HC" in the name, do not effect royalties from existing "non-HC" unit wells.  When a company drills and completes an HC well, they file an "as drilled" form with the state.  The report gives the length of the perforated portion of the lateral and the linear feet that lie in each unit.  The report also provides a percentage of production that well be allocated to each section.

    Jul 17, 2017

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      Steverino86

      SS, just to add to what Skip said, you will get a division order showing the number of acres in both sections, as well as an "allocation factor" based on the number of linear feet of the wellbore in each of those sections. Your decimal wil be based on your acreage in one or both sections, times the allocation factor, times your royalty percentage. I tried to copy and paste CHK's sample formula I just received in my division order, but could not. About 49% of the wellbore was in my section, and about 51% was in the other section, therefore I'm getting a little less than half my normal royalty. Hope that helps.
      6

      Jul 19, 2017

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