Combining Production

Say, for instance, that a mineral owner is leased only down to specified depth (say 10,000 feet) and he has reserved for himself all minerals below that depth. Can the unit operator, without obtaining a lease for below 10,000 feet, drill a well and subsequently combine production from above and below 10,000 feet? If yes , how does the operator differentiate for purposes of the royal payment to the mineral owner the respective amounts produced from above and below 10,000 feet.

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Permalink Reply by Ringgold Redskin on June 22, 2009 at 9:59
I'll leave the two zones for someone else to answer.
No problem producing from both zones in the well. They would dual complete the well, running two production strings separating the zones by a packer. On the surface two separate production hookup would be needed (separator, heat treat and mass flow gauge). It is not easy to complete a well this way and has a much higher cost.
Permalink Reply by drillbit on April 14, 2010 at 8:22
Field Orders allow combining of downhole production provided "ownership interests in these units are identical". Would someone please explain what this proviso means?
Permalink Reply by Les Bamburg on April 14, 2010 at 9:10
Drillbit, that provision just means the each royalty owner and working interest owner has the same percentage interest in the two zones (units) that are planned to be commingled. Therefore there is no need or requirement to separately allocate production between the two zones since there is no impact on the royalty and working interest owners.
Permalink Reply by j garrett on April 14, 2010 at 14:54
"Combining of downhole production" means, for instance, frac'ing each of the multiple payzones in the hole and letting the gas flow freely to the top (James Lime, Travis Peak etc). This allows the gas to commingle and be produced together. In this scenario, the operator would not know exactly how much came from the James and how much from the Travis Peak. That's why the ownership has to be the same in all zones being produced.
Permalink Reply by Bacon on April 14, 2010 at 13:53
If your unleased below 10K', and they are producing from below 10K', I'd be talking to an attorney.
Permalink Reply by The_Baron on April 15, 2010 at 3:13
The interest below 10,000 feet could be force pooled along with everything else, just couldn't put the well on that lease.
Permalink Reply by Missy on April 15, 2010 at 4:18
If you reserve the rights below a certain depth, wouldn't the company need a lease to produce those depths? I thought I read somewhere that even if they force pool someone, they still need a lease signed by the mineral owner.
Permalink Reply by The_Baron on April 15, 2010 at 5:33
nope.

Without a lease you can not drill on that tract, but if the tract is force pooled you could put a well on an adjacent tract and drill, or even drill under the tract with directional or horizontal drilling. The mineral owner would be treated as a UMI.

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