Purchased well maps off a website...question?

So I have a lot of activity in my area {Pulaski Pa} and to see if I might possibly be in a well unit I purchased well plat maps off a website.  (not sure if I am allowed to mention site name?}  Anyway, I look at the map and its a little confusing.  It clearly shows direction of well legs, marked top hole and bottom hole, two of the legs run across our property, the others are pretty close...my question is the rectangle that is highlighted around the acreage.  Is that the unit?  Because if it is, then we are in every unit, even if the leg doesn't run across our property?  Right or wrong?  Thanks for the help.

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Permalink Reply by Dexter Green on July 25, 2014 at 2:40am

The rectangle is very likely the unit boundaries.  Much of the acreage in a unit isn't touched by the lateral but rather is part of the required spacing between each leg.  So if you see your land is within the rectangle it's fair to assume that means you're in the unit.

Permalink Reply by JoKlause on July 25, 2014 at 3:11am

Thanks Dexter, so if there is 4 legs, 2 go across our property and 2 do not, but we are in the unit rectangle boundary...you think we are in in ALL 4 units? All 24 acres will get royalties from the 4 legs?  If you are right, that is good news!

Permalink Reply by Dexter Green on July 25, 2014 at 3:37am

I mean, it depends on how the units are structured, but it's not uncommon for a company to draw a huge unit and include all the wells into it. 

Permalink Reply by kh on August 14, 2014 at 5:47am

I am confused about the difference between a tract boundary and a unit. The well location plat has a tract boundary of 1,379 acres. There are 4 well on this pad with 8 laterals. Will units be declared inside this tract boundary or will all the acres in it included in the unit?

Permalink Reply by Philip Thackray on August 14, 2014 at 6:29am

Hi KHogan,

I like your horse.  I’m on a horse farm just down the road from you outside of Evans City, PA and in the XTO Marburger B unit on Brownsdale Road.

The boundaries shown on the drilling plat maps may or may not represent the final unit.  The maximum size for a unit is usually either 640 acres (one square mile) or 1280 acres (two square miles).  Have you checked for a Declaration of Unit at the Butler County Recorder’s office?

If you have 8 laterals then you must have 8 wells.  Each lateral has its own vertical well to the surface.

I’m guessing that Rex is doing the drilling?

Phil

Permalink Reply by kh on August 14, 2014 at 6:56am

Thanks. She's a Tennessee Walker. I board horses outside of Zelie. I'm in Beaver county. The gas company is Penn Energy. The permits are for 4 wells on the pad but on page 3 of the one well location plat I attached, it shows number of laterals = 2. They are just starting to build the access road for this pad now. We are a long way from declared units I think. A small amount of my farm is in the yellow high lighted area on page 6. What does the tract boundary indicate? 

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Permalink Reply by Philip Thackray on August 14, 2014 at 7:30am

K,

It does appear that there are two laterals per vertical well.  One lateral in the Marcellus and one in the UD (Upper Devonian) - I have never seen that before!  I learned something today - thank you!

Looking at the tract boundary, I would guess that to be the unit boundary as well.  The leases must have been written or amended to allow for a large acreage or they will divide the tract into smaller units that occupy the tract boundaries.    I think the yellow shading is simply drawing attention to the well path, nothing more.

I would say that whatever you own inside the tract boundary is or will be in the unit.

Good luck and happy horsemanship!

Phil

Permalink Reply by kh on August 14, 2014 at 7:56am

thanks phil I hope so too

Permalink Reply by Carl Krebsbach on July 25, 2014 at 5:14pm

I get the distinct impression that some people are of the belief that if their unit has either more laterals or is bigger that somehow it means they will get more royalties.

If someone has 10 acres in a 100 acre unit that is paying $50,000 for the hundred acres, that means they are going to get (all else equal) $5,000, or one tenth of the total payments.  If someone has 10 acres in a 1,000 acre unit that is paying $500,000 for the 1,000 acres, that means they are going to get (all else equal) $5,000, or one hundredth of the total payments.  So even though the pie is bigger, your share is proportionally smaller.

Permalink Reply by Philip Thackray on July 25, 2014 at 11:32pm

Carl,

Or put another way, if the laterals are twice as long there will be twice as many acres in the unit.  Your acreage and production per acre are all that matter.  In a given shale, production per acre is controlled by spacing of the laterals, placement within the formation and the fracking job.

However, I think Dexter was just trying to say that the trend is to larger units.  I was just asked to approve a change to a lease I have from 640 acre maximum unit size to allowing 1280 acre units.

Phil

Permalink Reply by Dexter Green on July 26, 2014 at 7:07am

That was indeed what I was inferring.  I'd rather have a 1280 unit with 10 wells than a 120 with one.  Smaller total share of the pie, but much bigger pie.  And I don't know about any of you but the bugger the pie, the better.  But then that might be how I got a little doughy in the middle...

Permalink Reply by JoKlause on July 28, 2014 at 7:44am

Dexter, since I was able to get free maps emailed to me I requested plat maps for two other well sites that are close to my house (within 2 miles) the one map which is Whiting South, has 8 legs in a rectangle boundary, it says 1277.4 acres is in the tract boundary.  Is the 1277.4 acres the size of the unit?  And the unit has 8 wells on it? 

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