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Permalink Reply by Skip Peel - Mineral Consultant on March 19, 2024 at 2:40

Yes.  Diana, most alternate unit wells are now Cross Unit Lateral wells producing from multiple sections/drilling units.  The majority of mineral owners with Haynesville royalty revenue received a Division Order (DO) for their first well which was drilled only in their section/unit.  That DO established their decimal interest in the production of that unit.  Those Cross Unit Lateral wells are now designated as HC wells (Horizontal Cross).  An HC well will produce from two sections/units in most cases sometimes from three.  The total length of the perforated lateral is divided into percentages.  For example, if a 7500' lateral producing from two units is perforated in 5000' of unit A and 2500' of unit B, then the original decimal interest for A would be multiplied by .666 and the original decimal interest for B would be multiplied by .333 to get the adjusted decimal interest for that specific well.  Each well in a group drill with have slightly different lengths and percentage adjustments.  The percentage of an HC well that is producing from each unit is detailed in a report that the operator files with the state and is made public record in the state O&G database, SONRIS.

Every Haynesville mineral owner should have a copy of the unit survey for their section or sections.  A unit survey shows the surveyed acreage of their tract, the number of acres in the drilling unit and the percentage of the unit acres that the tract represents.  With that and knowing the royalty fraction in their lease, all mineral owners can do the simple math to determine their correct unit decimal interest.  It should match the eight digit decimal interest on their original DO.

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Permalink Reply by Diana Canady on March 19, 2024 at 18:25

Skip,

Thanks very much! You explained that really well.

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Permalink Reply by Skip Peel - Mineral Consultant on March 20, 2024 at 3:35

You're welcome, Diana.  I've had sixteen years of practice explaining the arcane workings of Louisiana mineral statutes here on GHS.com. 

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