Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on November 9, 2013 at 14:44

Depends if it is a lease well or a unit well.  Units come in different sizes.  Not all cover an entire section.  If it is a unit well and the unit covers the entire section, it doesn't matter that you are leased to a company other than the one drilling the well.  A unit force pools all the mineral interests within the unit boundary.  If the well is productive all minerals in the unit receive royalty regardless of where in the unit the well is located.  Are you asking about a specific well?  If so, what is the section-township-range?

Permalink Reply by Aubrey C. Sanders, Jr. on December 5, 2013 at 11:29

If the subject well is a lease well only the landowner of the location will benefit from well production until and, if a unit is established post drilling. Otherwise only one landowner will benefit.. Drilling units do not always include a whole section.

Permalink Reply by Ben Barnhill on December 17, 2013 at 7:01

Let me take this a little further.

Assuming a drilling unit is formed and drilling commences, are all land owners under lease with the drilling company entitled to a share of all well production within the drilling unit in accordance with the royalty calculations stipulated within the lease?

For instance say an 1280 acre drilling unit is formed and a single well is drilled on my property, but other wells are drilled on other properties within the drilling unit.  Then are all the land owners within the drilling unit paid a percent share based on the total output of all the wells of the drilling unit? Or are they only entitled to a share of the output of the well physically located on their own property?

 

Permalink Reply by Rock Man on December 17, 2013 at 7:07

You share in all wells drilled in the unit whether on your lease / tract or not

Permalink Reply by Ben Barnhill on December 17, 2013 at 7:11

Thanks Mark, that's some encouraging news.

Permalink Reply by Skip Peel - Mineral Consultant on December 17, 2013 at 9:19

If you owned 12.8 acres of the 1280 acre unit you would receive 1% of production of all unit wells regardless of surface location times your royalty percentage.

Permalink Reply by Rock Man on December 17, 2013 at 9:38

Wouldn't it be 1% times the royalty percentage for the 12.8 acres?

Permalink Reply by Skip Peel - Mineral Consultant on December 17, 2013 at 10:03

Decimal participation interest.  Mineral owner's acreage divided by the number of acres in the unit times the royalty.  Example:  12.8 divided by 1280 = 0.01 times (the royalty, I'll use a quarter royalty) 0.25 = 0.0025.  1 acre divided by 1280 = 0.00078125 times 0.25 = 0.0001953125.  The lessor's decimal participation interest appears on their royalty statement. 

Permalink Reply by Andrew on December 18, 2013 at 23:19

Remember that if the unit was formed by the Commissioner, the unit would only apply to a particular zone or formation. You would only share production from the unitized formation. So if the 1280 unit was for the lower smackover formation, and a well was drilled inside the unit boundaries that produced from another formation (e.g. Pettit), that well's production would not be allocated among unit owners.

Permalink Reply by pip318 on December 19, 2013 at 1:37

Anybody,

Since a unit can be smaller than a section, where do you go to find out how many acres are in a unit and what area the unit covers?  Assume you are researching a tract in a section with multiple producing wells and LUW codes.  You are trying to determine if the tract you are researching (which has no wells on it or close to it) is HBP.   I assume a LUW is a number to designate a unit.  Wouldn't you have to look up each LUW to determine the area it covers?  If so, where is that information?  

Permalink Reply by Skip Peel - Mineral Consultant on December 19, 2013 at 3:19

There are several ways to access a copy of the plat for the unit some more simple than others.  When was the first well drilled in the unit?  What is the full well name?  What field is the well drilled in?  If you don't know but do know the well serial number, post that.

Permalink Reply by Andrew on December 19, 2013 at 20:39

Unfortunately, it is hard to get this information unless you already know a good deal of other information. To my knowledge, there is no comprehensive map of all of the active units in Louisiana, or even a field, and I am certain that there is no such map that is publicly available.

Your answer to Skip's question will determine where you would start. If you have information about a unit well, whether permitted, producing, or plugged, that will give you some major shortcuts.

Also note that whenever a Conservation unit is formed by the Commissioner, all of the mineral and lease owners inside the unit (and often in adjacent units/sections as well) are mailed a notice of the proposed unit that should include a map of the unit and the tracts. If there's already an old unit formed, there will likely be a change of unit operator, which the owners receive notice of as well.

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