Replies to This Discussion

Permalink Reply by CAM on August 10, 2012 at 3:45pm

Hi Sherry.  All companies/lease language varies regarding reference(s) to a unit.  In my case, my lease has several provisions covering unit details.  I would recommend you review your lease for such reference.  Again, in my case, due to my lease language, I received written notification, which included legal papers signed/executed by the Company legal reps., a copy of the unit declaration filed with Ohio, a copy of the unit area/range filed with Ohio, and a listing showing the other landowners who are included in the unit, along with details on how many acres each landowner had captured in the unit.  Example:  while Mr. & Mrs. Smith leased 130 acres to ABC company, ABC only included 41 acres of that 130 into the unit.  There are additional legal documents that had to be filed with Ohio not included in my letter of unit notification but I was able to find those on-line via the Ohio web-site and captured those for my files. 

Regarding your second question on royalties, again, I would point you to your lease language.  Mine does in fact contain references to vertical vs. horizontal drilling approaches.  Your question may be more direct when you say "no matter which way they drill."  They do not have to drill under your property - you would receive royalties as simply being part of the unit.  But again, the lease language rules and if it contains references to royalties (some people did not agree to royalties but settled for larger, up-front signing bonuses) you should review what stipulations are in your lease document.  Hope that helps!

Permalink Reply by 0ym9x5ag7ury2 on August 10, 2012 at 4:04pm

We found out that we were in a unit by looking at the pre-made label on the certified letter from Weston Water who is testing wells for CHK. You are in a unit if the well permit shows a drill bit passing under your property. You can use the well name at the bottom of the Weston Water label, below your address and after the well is permitted you can go on ODNR website Emergency "Well Locator" and see the results of where the drill bit will pass under your property. I beleive it was a member who calls himself Marcellus who described how the unit is a rectangle that follows the drill bit. An individual who has been drilled under told me the details of how a unit is being formed by CHK in Columbiana County and Marcellus who works in the industry confirmed what he described.  Search using Marcellus and you can read what he has posted.       Good Luck.  Ron

Permalink Reply by Kathleen on August 11, 2012 at 9:03am

Hi Ron,

I'm sorry but I disagree that a drill bit has to be under your land to be included in a unit. Your land minerals just need to be declared in that unit.
A unit can be up to 1280+ acres (yes many leases have unit sizes no bigger than 640, I'm just using 1280 as an ex.) and all those listed in that unit will receive royalties per their specific lease. This unit might never have more than one well draining, let's say 150 acres going NW, but everyone in that declared unit gets a piece of that pie regardless if it ever goes under your land. This is why it's such a big debate about accepting larger unit sizes if the company asks since the larger the unit at this time requires more wells drilled. This leaves the royalty owner at the mercy of the company to drill all acres not just one or two wells to HBP this type of scenario of 1280 acres.

Permalink Reply by CAM on August 11, 2012 at 11:04am

Kathleen:  thank you for the additional explanation.  You are right.  It's pretty simple:  if you're in a unit, you're in a unit - matters not where they drill as long as it's within the unit parameters/boundries.

Permalink Reply by Denver Gallentine on August 11, 2012 at 1:55pm

Cam & Kathleen: Super explanations. Thanks for clearing up a question that has bothered a lot of people. Denver

Permalink Reply by 0ym9x5ag7ury2 on August 16, 2012 at 10:46am

Please refer back to my explanation when you start receiving royalties for a percentage of your parcel and wonder why you aren't getting credit for all the acres you thought were in the unit.      Thanks

Permalink Reply by TM on August 16, 2012 at 11:35am

So if you are put into a production unit are you getting paid for your whole amount of acreage in the unit or just for the lateral that was drilled through the entire unit?

Permalink Reply by Kathleen on August 16, 2012 at 1:19pm

Hi.
I'm going to stick to what I learned and keep using 1280 for this example also.
If you have 100 acres leased to any co. in Ohio it doesn't mean all your acres will go into a specific unit when it drawn.
In our area the wells run NW or SE so when a 1280 unit is drawn it may run through your property or catch just a corner which means only what is in the declared unit of your acreage gets royalties.
There is also the buffer zone acreage that goes in so land you own not being drained (or maybe since that's still up for debate) in that specific unit also is included.
At some point they could put in another pad or unit on the current pad to draw up another unit which may get the rest of your land.

Permalink Reply by Denver Gallentine on August 17, 2012 at 4:31am

Kathleen,
I am an example of what you are saying. I have land in Rose Townsip. When the Ramsey well pad was started I tought all my land was included. I soon found that only 2/3 of an acre is in the Ramsey PU. The remainder is in the Savage PU. When the Ramsey well is done I will receive royalties for only the 2/3 acres in that PU. Denver

Permalink Reply by Kathleen on August 17, 2012 at 9:55am

Isn't this fun! :0)