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Permalink Reply by Bill Barnaby on June 16, 2014 at 3:08am

Not really rare, the gas companies like the big units so they can lock down more land with a single hole. The term "1240" is generally what they aim for where yours is 1250.

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Permalink Reply by Philip Thackray on June 16, 2014 at 3:55am

Zack,

Congratulations on being in a unit!

If the wells are placed such that the unit acreage is uniformly drained, the size of the unit does not matter to the individual land owner.  Only your total acreage in the unit matters.  A well designed unit performs in a “per acre” fashion.

When laterals were typically 4000 feet long, a single well was thought to drain 80 acres.  Now that laterals are typically in the 5000 + feet long a single well would drain 100+ acres like the wells in your unit.

Longer wells produce more gas but require more acreage in the unit to do so with the net effect that longer wells do not affect the “per acre” production.

However, a large unit filled with wells like your does have some advantage.

1. Your royalties are based on the average behavior of many wells.

2. I think it is more likely that the O&G company will return to the site sometime later to refrack existing wells or place new wells between existing wells or drill to another formation if stacked pay zones exist in your area.

As Bill pointed out, “1280” (2 square miles) is the new “640” (1 square mile).  I just signed an amendment to a lease I have with Rex Energy to eliminate the 640 acre limit in the old lease.  (Of course, I got something in return for that!).

Phil

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Permalink Reply by Bill Barnaby on June 16, 2014 at 7:05am

I'm interested in what you got in return for that.... they offered us a whopping $10 to sign (total), this was another company.

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Permalink Reply by Philip Thackray on June 16, 2014 at 7:58am

Bill

My situation is a bit unique.  My old lease had some problems (long story but the word forgery appears quite often!).  So I was able to get a completely new lease with the 1280 unit acre clause and went from 12.5% royalty to 15%.  I also got a small amount of upfront money that was intended to pay my legal bills (the lease problems – forgery - being Rex’s fault) but the money actually greatly exceeded my legal bills.  I was very happy with the way it all worked out.

Phil

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Permalink Reply by Bill Barnaby on June 16, 2014 at 8:39am

That's great news for you and those who get to share your new found paper! 

Thanks :)

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