Different Drilling Companies And Royalties

What happens if my property is leased by one company and property next to me is leased by a different company and they put a well on their property? Would we get royalties?

It appears that many of the property owners near us signed in 2011 with a different company than we did when we signed in 2012.

Thanks for any help!

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Permalink Reply by Paul Martinelli on August 1, 2012 at 1:17am

you will only get royalties if part of your property is declared as part of a drilling unit. The drilling unit may have leases held by more than one Company.

Permalink Reply by Farmhouse on August 1, 2012 at 1:27am

It depends on whether or not your neighbors company includes your property in a production unit.

A very basic explanation: picture a dartboard- the outer edge of the dartboard is the boundary of the production unit. The bulls-eye is the well or well pad. The number of acres of your land within the boundary of the unit is what you would be paid royalty on.

When more than one company is involved, usually the drilling company will attempt to deal with the other company(s) to agree on proportionate involvement in drilling costs etc. Usually they make a deal, but not always. There have been cases where parcels have been left out.

Also remember, in the above scenario you still get paid royalty on the % on YOUR lease, not your neighbors.

All of the above is very general information. Everyone's specific situation is different. Good Luck!

Permalink Reply by GardenMom on August 1, 2012 at 3:22am
Farmhouse, Thanks for the info, that helps me understand a little more. So if my acreage lies within the production unit but it is with a different company and they don't want to make a deal, how do I know they aren't withdrawing resources from my property? Obviously if ther are resources being taken from my property, shoudln' t I be compensated?
Permalink Reply by Wayne D on August 2, 2012 at 11:39am

In PA you are SOL . However I believe the actual horizonal drilling can not pass under your property . Although with fracking they will suck the gas out from under you and claim that rule of capture applies .  Thats I my argument to encourage forced pooling in PA .  I have 30 acres with pools all around and shell does not want to sign a lease ,

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