Replies to This Discussion

Permalink Reply by Ben Elmore on March 30, 2011 at 9:03

My guess is your pooling provision goes on to state "640 acres with a tolerance of 10%, or as permitted by applicable government regulations" or something to that effect.  Is that right?  If so, the RRC rules and applicable field rules likely permit this size of unit and your lease is held beyond the primary term by the well.  However, a couple of more questions:  Is the entirety of your 80 acres in the unit?  What is the name of the well and operator, so we can confirm the type of well and field rules?   Is the well producing and was it producing at the time your lease expired?  If not, was the operator drilling the well at the time your lease expired?

Permalink Reply by Hank henry on March 30, 2011 at 9:40

The lease says 640 plus a maximum acreage tolerance of 10% unless its a horizontal and the unit may be increased to a well spacing or density pattern that may be prescribed or permitted by governmental autority having jurisdiction. My property is on the boundry of the unit and is not necessary to keep the horizontal in the unit. It appears to me it was added just to hold my property by production. The well was not completed at the time the lease expired.

Permalink Reply by Ben Elmore on March 30, 2011 at 9:59

What is the name of the well and operator?  How far away is the well from your tract?

Permalink Reply by William Gardner on March 30, 2011 at 9:13

The bigger the unit the more diluted your royalty when they figure up your portion of the revenue dec.  Based upon what I've seen, a 1/6 royalty is a bit low.  But if you live in an area where there is not a lot of activity then.  

 

As a general rule a lease is a lease.  If they unitize you they will in all most all likelihood want to keep you at 1/6. See what you can learn from your neighbors or other mineral owners about their percentage and if they have had success renegotiating.  From there you will have to decide if you want to gamble on a new lease or not.  

 

One other thing.  If you are in TX, go to the railroad commission website and investigate who is around you.  If you are boxed in that would sway your decision to stay.  And if you're in LA, use Sonris to look up your area.    

Permalink Reply by Ben Elmore on March 30, 2011 at 9:22

If they have properly pooled your interest under your lease, they have no reason to negotiate with you as you have no leverage.  Of course it never hurts to ask.  IMO, you need to first determine if you were properly pooled so as to extend your lease into the secondary term.