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Permalink Reply by Skip Peel - Mineral Consultant on October 24, 2015 at 4:00

A non-unitized well is a "lease" well.  It is my understanding that the state requires a minimum interest of 80% of the acres in each tract be under lease to the well operator or a participating Working Interest for all the acreage within the well spacing footprint.  Although the requirement is that all the acreage is under lease, only the potion of a leased tract within the well footprint is paid royalty on production. 

The following example is based on what I am familiar with regarding horizontal Haynesville Shale wells.  The well spacing in the original HA units was 80 acres. The foot print for that 80 acres was a rectangle 660' by 5280'.  Any tract wholly or partially within that rectangle shared in the production of a lease well.

Now that Cross Unit Lateral wells (HC) are approved the footprint for a single well may cross unit borders and be 660' by the linear feet of perforated lateral.  So something greater than 80 acres but variable by the length of the horizontal perforated portion of the wellbore. 

The question that crops up regarding who gets paid what stems from any instance where a well is completed and turn to sales before a unit application is approved and a field order issued authorizes the operator to pool all the mineral interests within the unit boundary.

During the early HBP phase of the Haynesville Shale there were numerous HA lease wells permitted and drilled.  However the vast majority of those wells had unit applications in progress and the field order for the unit was approved and in place prior to first production so that all the mineral interests within the unit boundary received royalty from first production of the "unit" well.  The "lease" well was converted to a "unit well" before the first mcf was sold.

Disclaimer:  I am a landman, I am not a O&G lawyer (IANAL, in GHS speak).  I would expect that the production from a lease well would be attributed to only those acres in the well footprint until such time as a field order is issued at which time all the acres in the unit would share in production.  That would mean that the royalty interests in the lease well would start with a decimal interest based on their ownership of the acres under the lease well but that would change when a new Division Order was used to begin paying all the owners of acreage within the unit boundary after the state approves a field order.  Since this is a Claiborne Parish discussion my comments are based on what I know of Louisiana mineral law.  I'll leave further comment to some of the other industry members who may have more specific experience with this particular circumstance.