Drill unit or production unit?

This may be a dumb question but I have asked several people and have gotten varying answers......Here it is.....In PA,if a well is permitted for 6 legs, and I am in the 1st leg of the well that is 512 acres. Am i paid for my share of just this leg? Or are all the property owners of all 6 legs, Im guessing roughly 3500 acres, also paid for this first leg. And then of course I would be paid for my share of the other 5 legs....Is one leg a drill unit and the whole thing a production unit? how does this work?

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Permalink Reply by Kathleen on December 19, 2013 at 6:16pm
I would make an appt. with an attorney on this, since it should be worth your time and money. I cannot see this costing you too much.
If the declared unit has more then just gas in the product they pull up, then your lease has to be amended.
Where you are in the unit could make a big difference.
I'm not sure if you should contact the driller or atty. first.
If you are in a good position in the unit, where cutting you out is not available to them, then you should be able to get something from the co., holding your lease.
If you get a bonus from this I would be surprised but remember being in the unit is more important to your pocket book and try to get a real gross lease or at least a higher %.
Do you know the BTU numbers coming up from other wells in your area? If the BTU's are higher then there is oil or wet gas there.
Something I think everyone should do is talk to their neighbors. I'm sure some of the land around you has similar leases and the similar not so bad problem.
There's no difference in the wells they are drilling now. They all IMO are hoping to hit oil or wet gas, but sometimes there is only dry gas. I hope its a higher BTU for you. Please let us know what happens. So many will have this issue come up and will look to see how it went for others.
Permalink Reply by Robert Matthews on December 20, 2013 at 12:15pm

Thanks for the advice Kathleen.  I have dealt with Piergallili law office on one of my properties.  Do you have someone you trust that could handle this?  I live in Pa.  also,  once a declaration of a pooled unit has been recorded, can they deplete me from it?

Permalink Reply by Kathleen on September 1, 2013 at 4:52pm
Which side of PA are you in? If you're not on the western side, I do not think the oil acreage language would matter much.
To answer your question pretty clearly, you would only be paid on that one leg of 512 acres if that's where your minerals are. They would declare a pooled unit of 512 acres. That acreage is large enough for them to come back in time and put more wells in. This sounds like they are trying to hold a lot of land with as few wells as possible right now.
I wonder what happens, if say, even one barrel of oil gets pulled up if you are in that 512 acre unit? Has that happened in the Marcellus at all in PA?
Permalink Reply by Gas heir on September 2, 2013 at 7:15pm
We are in western PA. I might call tomorrow or I just might wait to see what happens. I'm sure everyone in the unit has the same lease I do since we are all held from old Vista leases, mine was signed in 2008. It's going to be an interesting year!
Permalink Reply by Kathleen on September 2, 2013 at 7:35pm
Oh please report back. I'm so curious, since your 160 is on the low side for a oil unit and to think all your other neighbors most likely have the same lease makes this so interesting to me.
Permalink Reply by Archer Man on December 18, 2013 at 9:05pm

To further this discussion: I've heard rumors of companies defining production units from a measured area around each well bore… is there any validity to this statement?  From everything that I've read about I would say no. 

More properly: A company defines a production unit and drills wells within the unit.  Then all landowners that are within that unit share in the royalties (based on their decimal interest).  This is correct, right?  This makes more sense to me b/c this allows a company to make a 1,000 acre unit with 2 wells to hold all of the acreage by production.  

Thoughts?

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