Is there a maximum number of acres for which a driller can define a unit / pool in West Virginia? For example, must a unit / pool be smaller than 640 acres? I have done searches on the internet and here, and do not find any information to help answer this question.
Thanks in advance
Thank you for your reply. I would like to know about why larger units are better. My thought was a smaller unit was preferred. For example, my 90 acres in a 450 acre unit provides a much larger decimal interest than my 90 acres in a 900 acre unit. If two wells were actually brought online, then I am realizing a much larger revenue stream, in a more early time frame, in a 450 acre unit. If the unit size were 900 acres, the royalty amounts are smaller, and there is more uncertainty about the future because I would be required to wait whatever time period is required until another, if any, well was produced.
Thank you! I appreciate your great reply. Very helpful and some nice thoughts to consider. I am thinking the laterals in a 450 unit can be the same length as the laterals in a 900 acre unit. The length of the unit just has to be the same. The width might be different and the total number of wells less. Also, if the 450 acre unit drilled two successful wells, the royalty income is received today, and can be reinvested. There is less uncertainty with regards to when future wells might come online. It seems like a preference can be made in regards to unit size.
Our lease specifies all our land in only one unit. However, the O &G split our land into two units, which violates our lease. Now I am trying to understand what I should do. we have not signed the division order. We wanted a higher royalty income sooner, rather than later, and do not like having the smaller decimal interest. We are challenging that our land was split into two units when our lease says only one unit. Two wells were drilled, and both drain from our land. Still waiting for the O & G to reply (I won't specify the company)
Sorry for the delay responding. I think I know what is happening. I have seen division orders for units with a total of over a thousand heirs inside the unit. That means that all 1,000 heirs have to have language specific in the lease to allow for a maximum unitization clause. There is no way you are going to get all 1,000 heirs to agree to the same clauses. The companies have to get creative. Thus... one well units, which as I said can be risky, or two one well units, which is less risky but serve the same purpose as a two lateral unit. Ask for a copy of the units declaration...both of them. They are of the public domain and should have been recorded in the courthouse. If both units butt up against each other and you have no acreage that has not been unitized...to be honest I would not worry about it. If you have stranded acreage then I would ask to amend the lease. Have the company pay you a pugh clause rental for the stranded acreage...and amend your lease so that the company only has rights to the producing formation...the Marcellus. The company would have to surrender all formations above the Marcellus and below the top of the Onondaga...that is what I would do...they screwed up so make them pay for it...this way.