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Permalink Reply by Les Bamburg on February 10, 2012 at 4:26

Shaleeee, I will provide the following answers in relation to the Haynesville/Bossier Shale.

 

Does a land owner have to be unitized to have a well drilled? If not, is 80 acres the minimal amount of land for a well not in a unit?

 

Operators generally form single section units (~640 acres) before drilling a Haynesville Shale well. Other formations can have units of similar or smaller sizes (ie 80, 160 or 320 acres). Very shallow oil or gas wells can be drilled on a lease basis.

 

If you are unitized and no well is drilled on your land but there are several wells drilled in the unit, how are the royalties divided?

 

Gross interest is allocated to individual leases (tracts) within a unit based on surface area. So if you own 80 acres in a 640 acre unit, your lease would have a tract interest of 12.5%. Assuming the unit has a single operator selling all the production, your royalty payment would be based on your royalty % times the tract interest times the production. So for a 20% royalty, 12.5% tract interest and 100,000 Mcf of production your royalty share would be 2,500 Mcf.

 

The situation could be different if more than one operator is selling gas production (taking in kind) from the unit.

 

Would that amount be less than it would be if the well was on your land?

 

No. You receive the same share of production from a unit no matter where the unit wells are located within the unit.

 

Does one well in the unit hold the lease on all acreage in the unit?

 

Generally yes.

Permalink Reply by Shaleeee on February 10, 2012 at 5:12

Les, thank you so much!