landowner

Another company drills in my unit?

Our Fayetteville Shale production unit is 640 acres. When the company that leased our mineral rights drills in our unit, we get royalties in accordance with our contract. But, what happens when another company drills in our unit? Do we get the same royalty? Do we only get the minimum royalty mandated under state law instead of the higher one we negotiated? How does this work?

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landownerPermalink Reply by WayneandAnna on March 2, 2009 at 12:08
Jim, you're saying my contract in that section rules for me no matter which company drills. Right?
Permalink Reply by ELLIS HUGH on March 2, 2009 at 15:45
Your lease would be valid regardless of who drills the well.

landownerPermalink Reply by WayneandAnna on March 3, 2009 at 4:58
Here’s my new understanding.

In my 640 acres production unit, several energy companies lease the natural gas rights. When one drills, they each get the percentage of gas that they have signed in that unit. Each has various contracts with mineral owners, and each pays out accordingly.

Now let’s suppose only two energy companies are involved. And let’s suppose Company A has acquired 40% of the mineral rights in the production unit and Company B has acquired 25% of the production unit leaving 35% of the mineral rights owners unsigned. The 35% will get royalties according to state law provisions. But, if Company A drills they get 40% of the gas, Company B gets 25% of the gas; who get’s the other 35%? Is it prorated between the companies? Does it all go to the company who drilled?

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