Drilling unit vs production unit

There is an interesting discussion on the Ohio Landowners page re. drilling units and production units. If I understand it correctly, it is possible to be in a producing drilling unit and still not be paid royalties because you are not in a subset called the production unit. This is new to me as I thought that if your land was in a drilling unit, you benefitted from all of the wells drilled in that unit. Is this new or did I miss something in discussions about the potential benefits of being in a larger unit?

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Permalink Reply by evan on January 29, 2014 at 7:12am
That's what's happening to me as we speak. Not sure of all the facts but I'm about to find out real soon if this is a legal thing or not. I'm sure it is legal but I got a lot of things to straighten out soon
Permalink Reply by TM on January 29, 2014 at 7:35am
It is up to the driller. They can make small or large units. If people have old shallow leases and don't sign pooling or unit size amendments they can drill 160 acre units or even smaller. You would be stuck at a 160 acre unit size limit because of the old shallow lease terms. In this case you would only get paid for that small 160 acre unit. I believe Chesapeake has drilled these small units in Carroll county.

If your land is pooled together with your neighbors to build a 640 or 1280 unit everyone in the unit gets paid royalties from all the wells that are drilled. This would happen because you signed unit size and pooling amendments to an old lease. All the people in the unit will share in the royalties.
Permalink Reply by evan on January 29, 2014 at 9:03am
That's my issue TM I got a declaration of being in a unit and was happy about it. Then they got a new permit and changed the unit to a 137 acre unit when it was 639 a few weeks before
Permalink Reply by TM on January 29, 2014 at 9:22am
Evan have you checked at the courthouse to see if the declaration of pooled unit was filed with your lease yet? If the pooled unit at courthouse says it will be 639 acres that is what the unit will end up being in total.

The unit you are in should increase in size as they permit new laterals. Once all the laterals are permitted it should add up to the 639 acre unit. I thought I saw 2 laterals on ODNR that was over 300 acres in size. So if they permit two more wells it should end up at 639 acres.
Permalink Reply by evan on January 29, 2014 at 9:31am
So will I get paid in the first lateral then. One other person in the 137 acre unit got paid delay rental couple weeks ago. Why wouldn't anyone else. And yes the 639 acre unit is recorded at the courthouse.
Permalink Reply by TM on January 29, 2014 at 11:39am
Not real sure what they are doing with this unit. If you look on ODNR completion reports it will show you who gets paid royalty on the individual laterals. I did not see your name in the list for the first lateral.
Permalink Reply by evan on January 29, 2014 at 12:24pm

My property wouldn't have been in the first lateral thats why I was wondering what's going on.. where can I find completion reports. I ll check it out. Thanks 

Permalink Reply by TM on January 29, 2014 at 12:49pm
The 2 laterals that have permits right now is like 315.7 acres. When they add 2 more laterals it will be around 630 some acres. Your land will be included in one of the last 2 laterals when they get the horizontal permits done. The whole unit is to have 4 laterals drilled from the pad.

The completion forms can be found here below. Click on reports and then completions and select the county and operator name and look through the reports.

http://oilandgas.ohiodnr.gov/mineral/OHRbdmsOnline/WebReportAccordi...
Permalink Reply by evan on January 29, 2014 at 1:49pm

Alrighty I ll check it out thanks again

Permalink Reply by Kathi Albertson on February 12, 2014 at 5:30am
TM,
I don't have a pony in this show but am trying to understand how things work for when my turn comes up. When your land is in a pooling unit, say 640 acres, do you not get your share of the royalties for all laterals in the 640 acre unit, determined by your % of acres in the 640 acre unit? My confusion is based on your statement above "it will show you who gets paid royalty on the individual laterals."

Thanks for your patience.
Permalink Reply by evan on February 12, 2014 at 6:04am
I understand some companies do it different. I'm in the 640 acre unit but when they applied for a permit they broke it down to 137 acres so only the landowners in the 137 acre unit will get paid. As I understand it's not always this way and depends on the company.
Permalink Reply by TM on February 12, 2014 at 7:52am

Kathi,

It all depends on how the driller wants to set up the unit. Some pooled units all landowners in the unit share in the royalties from all the wells that are drilled. You will get paid based on the amount of your pooled acres in the unit. If 6 wells are drilled everyone in the unit shares in the royalties from all 6 wells.

In other units the individual laterals are broken down separately and you will only get paid from one lateral maybe two depending on the size of your parcel and how it lies within the unit boundaries. 6 wells could be drilled but you might only get paid royalties from 1 or 2 laterals in the unit.

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