pooling

if you are part of a unit that has 5 holes do you get royalties from all 5 or just the ones that go under your land, maybe a stupid question but I don't know

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Permalink Reply by Joseph-Ohio on September 17, 2014 at 2:54pm

Every 'hole' as I understand it would be representative of an individual 'Unit'.

I further understand that payment would be based on an individual 'Unit' basis.

Only my understanding of it - and I don't think I'm wrong - someone please correct me if I am.

Permalink Reply by Joseph-Ohio on September 17, 2014 at 3:29pm

Was writing in terms of a 'drilling unit' not a 'production unit' myself.

As I understand it, payout would be based on your 'acreage prorated share' of any 'drilling unit' within your land; and you could have more than one 'drilling unit' occurring within your land. As I further understand it a 'production unit' (normally being 640 acres - but I've also read 1280 acres bandied around) would / could contain numerous 'drilling units'

Permalink Reply by James Foster on September 18, 2014 at 9:55am

Payment is based on a production unit not a drilling unit!  Your acres are prorated by the production unit. We have 13 acres in a 640 acre unit but only in one drilling unit.

When you get your declaration of pooled unit and it's 640 acres and your drilling unit is 153 and the declaration of pooled unit lists everyone in three drilling units you all receive money from all three wells.  When you get your check is says you have x acres in a production unit of 640 acres and that is how your unit multiplier is calculated then times your percent royalty then times the sales for that period and that is what your are paid.  There is no question that this is true.  People have checks and this is how it is done.  PERIOD! 

Drilling units are strictly for ODNR and if you look at a unit acre drawing on ODNR it says so right at the bottom right Note #2.  It is in no way a drawing that has anything to do with payment or production unit.  If you have an all or nothing lease you have land in a production unit that is not in any of the drilling units, which is a bit unfair to those whose land is in that unit.

Permalink Reply by Joseph-Ohio on September 18, 2014 at 11:58am

Well thanks for answering my question then.

As I understand you, you indicate that:

In Ohio, royalty payments are made to lessors on any producing well within a 'production unit' on the basis of dividing any lessor's amount of leased acreage by the total amount of 'production unit' acreage and of course then times the royalty percentage and then minus any deductions. As I further understand you this is regardless of 'drilling unit' acreage which is indicated for ODNR purposes only and is typical for any lease in Ohio.

Thanks again for your clarification.

I sought this clarification within my inquiries directly below.

Permalink Reply by Joseph-Ohio on September 18, 2014 at 1:01am

I've a question or so myself as yet.

Can / are leases worded to pay on the acreage pro-rated basis of the 'production unit' and not the 'drilling unit' ? This would mean that any well within the 'production unit' would pay every lessor on any well developed within the 'production unit'. Example: A lessor with say 10 acres of a 640 acre 'production unit' would be paid on the basis of 10/640 for any well within the 640 acres.

Or: Can / are leases worded to pay on the acreage pro-rated basis of the 'drilling unit' ? This would mean that the lessor would be paid on the basis of only the acreage of the 'drilling unit'. Example: A lessor with say 10 acres of a 100 acre 'drilling unit' would be paid on the basis of 10/100 for only the (1) one well draining the 100 acre 'drilling unit'. In this instance the acreage not included within the 'drilling unit' but a portion of say a 640 acre (or 1280 acre) 'production unit would be paid nothing until their acreage (or a portion of their acreage) becomes included in another 'drilling unit'.

Or: Can / are the leases worded either way dependent upon the lessee's and lessor's negotiated preferences ?

My preference would be to be paid on the acreage prorated basis of any well developed within the entire 'production unit'.

Permalink Reply by Buz on September 17, 2014 at 2:54pm
I think every one shares what drill in that unit. We have six Clinton well in are unit we all share according how many acres you have but that's the old leases. So i am not sure how it works now. Would depend on your lease I would guess?
Permalink Reply by James Foster on September 17, 2014 at 3:00pm

This depends on how the unit is put together. For example our production unit is 640 acres and there will be three wells total. This is in OH and right now that is about all you can get in a typical 640 acre unit here. If you had a 1280 unit then six wells typically. There are exceptions. Do you know how large the unit is and if all five are in the unit? Or are there two units one in nw and one se? If they are all in one unit then you should get paid for all.

The well under us is drilled but everyone in our unit will get royalties. If and when the other two wells are drilled we will get royalties from those wells. Do not confuse drilling unit with production unit. Each well has a surveyed drilling unit on file at odnr. Then company puts together production unit and that is called declaration of pooled unit and that is filed in county recorders office and you should receive a copy. This is in Ohio. Maybe someone else can give details in PA and WV.

Permalink Reply by Dott on September 18, 2014 at 8:05am

I have attached a previous discussion that has some good info

Attachments:
Permalink Reply by Joseph-Ohio on September 18, 2014 at 9:03am

Dott,

Your attachment won't open on my PC.

Suspect it is corrupt.

Can you save it to a PDF or something compatible with Windows 7 Ultimate (I'm running that OS).

Anyone else having trouble ?

J-O

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