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Permalink Reply by Robin Fehrenbach Scala on November 21, 2011 at 1:11am

Units have nothing to do with landowner groups. Once you have signed a lease with a company, you deal with only the company or whoever they assign the lease to. The landowner group is out of the picture. 

They don't have to drill directly on your land for you to be in a unit. You could be quite far away from the actual well and still get royalties in the unit, because the horizontal drilling happens underground thousands of feet below the surface and under your land. 

As long as you have a lease with Chesapeake you COULD end up in a unit. All or part of your land may be put in, depending on location. 

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Permalink Reply by Jim Litwinowicz on November 21, 2011 at 3:20am

Like Robin says the groups are solely for the purpose of negotiating a lease.  They have no say in forming units, which is completely different.  Units are the area of land that is to be produced by a certain well pad and are declared by the drilling companies. The companies decide this on many factors like location, amount of contiguous land under lease, geology, financial issues and more.

When they drill, they can go up to two miles under ground from a well pad but they usually go 4000 to 6000 feet. So they do not have to be on your land but the land has to be part of a unit of contiguous land with where the pad is located.  The parcel that is several miles from the others will have to be in a separate unit from the rest. That means that some of your parcels may be in a unit while the other will be in a separate unit at a different time.

 

Good luck!

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Permalink Reply by Easy on November 21, 2011 at 5:23am

The size of the units in the past could be part of your lease agreement. I am not so sure that you can do that today. Many of the older leases were for 80 acres. Then it was 640 acres, now 1280 acres are normal. As advances in technology make the laterals longer the units get bigger. Many groups were able to limit the size of the unit. 

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Permalink Reply by Mike h on November 21, 2011 at 8:52am

You can do it today. The SURE group lease (Carroll County, OH) has a max unit size of 640 acres specified. I'm not certain how much it matters as the units that have been registered so far in the area are all substantially smaller than 640 acres.

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Permalink Reply by Mickgyver on November 21, 2011 at 10:52am

Hello The good thing about being in a large group is that you have more ability to produce a list of Addendum's that will be attached to the main company lease which will still be part of your leasing venture .

The addendum list should state that all of these addendum's will be the controlling document should there be any disagreement as to what is going on .

It has been proven through many of the leases that have already been signed, that large groups with a lot of acres can negotiate with the companies for better changes of protection for the landowner .Trying to make good deals alone, are very hard to do unless you have a large block of acres yourself .

This addendum list  could include limitations as to how large a unit is , Those companies that won't agree to changes are not usually included in the final bidding for the group acres .

Many of the companies as I am told will trade around the various land they have leased to get what they want when they set up units .

Some have also said it is best to least separate parcels in separate leases to avoid problems .

The best is to do your homework and learn from many of the well organized people on this site that have been there and done it .

Good Luck to those who  have not signed yet ,the group is the best way to go it gives you strength as well as a lot of learning of the process and meaning of many of the normal lease clauses.

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