Replies to This Discussion

Permalink Reply by Foxiecajun on July 24, 2008 at 15:59

Only the the tracts in the unit get royalties. But remember a unit can be more than one section.

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Permalink Reply by T16N R14W S09 on July 24, 2008 at 16:03

Help me understand...how can a unit be more than one section. Does a "unit" mean the physical land that a well sits on? Or, are you saying that a "unit" can extend to surrounding sections? If that is the case, then how? I don't quite understand.

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Permalink Reply by ez on July 24, 2008 at 16:29

i was wondering the same thing. if a horizontal well is drilled from one section surface going under another section. how does that work?

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Permalink Reply by Friend on July 24, 2008 at 16:48

Note the well is were the bottom hole is... so a well could sit on one section and drill under another, with the bottom hole 'draining' the adjacent section. All that said, i would not be too concerned with this.... it is not the norm.

One is paid a contracted % of production (or royalties) for the holes in the section you own mineral rights in accordance with the % of land you own in the section (640 acres)...and in most cases a section "is" the unit.

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Permalink Reply by T16N R14W S09 on July 24, 2008 at 20:29

Thanks for the response. Any other responses?

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Permalink Reply by Les Bamburg on July 27, 2008 at 5:37

EZ, normally a company will not drill across section lines.

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Permalink Reply by Kassi on July 24, 2008 at 22:21

There can be as many as 1 well per 80 acres in a unit. A unit (pool) is typically along section lines. I have found 2 that were divided between 2 sections. Both of those were drilling into the Cotton Valley and Hoston formation. There may be only a couple of places readily available for drilling in your area now but that can change. Companies have been known to purchase building or homes and tear them down to make way for a rig. This has already occured in the Elerby Rd area from what I understand. Only the land owners in a unit will receive royalties for that unit. If you area a lease holder you would receive royalties based on the contract you signed (do not settle for less than 25% and get a "no cost" royalty clause!) If you are an "unsigned lease holder" meaning that you chose not to sign a lease then you would recieve 100% of what your fractional share is after the well pays for itself and expenses are paid. You would have to be pretty diligent about keeping up with things and possibly have legal representation from time to time in order to get paid but some people do choose to go that rout. Do NOT try to negotiate a lease yourself if you are a novice. Better to hire someone and better yet form a collective bargaining group with your neighbors and hire someone to represent all of you to ensure a lease that protects your property, neighborhood and wallet is obtained.

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Permalink Reply by RAY on July 25, 2008 at 3:15

Kassi, I only hear good things about you & your knowledge about this subject.

can I,we hire you??

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Permalink Reply by Two Dogs, Pirate on July 25, 2008 at 5:26

Shell/Encana formed sectional units around the Olympia and Murray wells if the section contained 640 acres then that was the size of the unit. Remember some section are larger and some smaller. The lease form allows for 640 acre units. The Chesapeke lease form allows for 1920 acre units.

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Permalink Reply by ChelleA1 on July 26, 2008 at 19:48

if you are pooled in a 1920 acre unit are your royalties calculated as such?? Meaning they would be less than a pool of 640 I got this idea from calculating at 320, the amount was substantialy higher than calculating at 640....?

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Permalink Reply by Randy on July 27, 2008 at 4:25

Yes fractionally your share would be smaller, however, there would likely be more producing wells in a 1920 acre unit. More producing wells would mean that although your share was smaller, it was a share of a much larger number. Essentially a wash...this is not a given and some will argue with my logic.

On the other side, the 1920 acre units will probably not be used, it's just another feather in their hat if they need it. We aren't running into areas where we can't find drillsites.

Randy

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Permalink Reply by P.G. on July 27, 2008 at 4:28

What if leases don't say anything other than 80 acres for oil and 640 for gas. Would 1920 acre units be a violation of the lease terms?

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