Limiting size of unit per well

I am looking for language that limits the unit size per well.  For instance,  even if you say a unit will be limited to 640 acres,  we all would want more than 1 well per 640 acres,  preferably 6 or 7 or 8 wells per a 640 acre unit.

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Permalink Reply by rmc on February 4, 2013 at 7:51am
What we did in our lease in Greene County Pa a few years ago is we didn't restrict the size of the total unit at all it could be as large as the company would like to make it but they had to drill enought wells to hold the entire acreage. One horizontal well equals 120 acres plus ten percent . At the completion of the primary term the company would have to pay another bonus to extend any acreage not included in a producing unit for another five years then after that they would have to release any acreage not producing.
Of course we are into our 4 th year of a 5 year lease with no drilling in site.
Permalink Reply by Gunner Ostergard on February 4, 2013 at 8:09am

Thank you rmc,  this is what I was looking for,  but why did you say 120 acres plus 10 percent,  why didn't you just say 132 acres?  what is the 10 percent from?

 

Permalink Reply by rmc on February 4, 2013 at 8:51am
The 10 percent language was inserted by the Gas company.They permitted 7 wells on one pad and when muliplyed 7 times the 120 plus the 10 percent you came really close to covering all the acreage in that group. The gas company sold our lease to another company and all the permitts expired.
Permalink Reply by rmc on February 4, 2013 at 8:57am
Although as Mr fang stated above I doubt you could get a company to agree to this terms today . Unless you get together with you're neighbors and put together a block of property that the gas companies want to drill. You all know the old saying about realestate it's all about location location location!!!!!!
Permalink Reply by lucky on February 4, 2013 at 11:44am

a pugh clause would cause a company, at the end of a lease term, to release back to the landowner any acreage that was not included in a unit. (currently proposed in PA senate bill 356). I am not sure why anybody would sign a lease without it, otherwise they could put just one acre of a property into a unit and then hold the entire property as under production forever.

Permalink Reply by melissa humphrey on February 4, 2013 at 12:10pm

fwiw unless you are a qualified geologist, you don't know what # is right. Even the qualified don't know the ideal spacing at hthis early point. The lessee, gasco, wants to maximise extraction, usually in line with

lessor's objective as well.

Permalink Reply by rmc on February 4, 2013 at 2:08pm
Hello Joe if someone would have said ten years ago that these companies would have been offerIng the bonus amounts they have in the last few years or would have been offering 20 plus page leases people would have laughed at you and asked what you where on
Permalink Reply by rmc on February 4, 2013 at 2:15pm
Why would you need to be a geologist to take the width of the proposed lateral(effect of Fracking)500' on each side of the lateral 1000' times the proposed length divided by 43560 square feet in an acre to figure out the possible area of one well?
Permalink Reply by rmc on February 4, 2013 at 2:28pm
Read about this companies EOG is producing their leases with up to 12 to 14 permitted wells per pad. A lot of these companies are just proving up there reserves with two or three wells per pad.
Of course for the legal folks out there that is just my opinion.
Permalink Reply by rmc on February 4, 2013 at 2:32pm
Also correct me if Iam wrong EOG is the first company to surpass 1 billion mcf per day of production in the Marcellus shale and they probably have less acreage then most of the large companies under lease in PA and Wv
Permalink Reply by rmc on February 4, 2013 at 2:50pm
Sorry folks Iam bad I didn't mean EOG but Equitable gas
Permalink Reply by lucky on February 4, 2013 at 5:02pm

The Lessors objectives are counter to that of the Lessee during the leasing process. After the lease is signed you may find that they are still not your best buddy. Numerous producers are and will continue to drill single wells in a unit to hold that unit under production, then move on and do the same to hold other units. 

As a landowner you would want to first get 100% of your land unitized, then you would want them to max the # of wells drilled into the max # of strata. So as you see, after leasing your interests are more in line but may never be 100%.   

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