Participating intereest by one company drilling by another?
A friend asked what it means if the company he is leased with is going to have a participating interest in a well that is being drilled by another company under ground with some of the land leased to one company or the other. he also thinks that he may be in the production unit, what does that mean?
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Replies to This Discussion
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Permalink Reply by Chris on
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Company A will drill the well, Company B owns leasehold in Company A's unit. So Company B will be a participating interest holder, sharing in expenses, revenue.... according to the acreage they have in the unit.
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Permalink Reply by Robert Bond on
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Thank you! So who will pay you the royalty check and compute it the company you are leased with or the company that does the operating and drilling of the well?
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Permalink Reply by Tom R on
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It gets a lot more complicated than you may expect. I am in a unit drilled and operated by Chesapeake. I leased with Chesapeake and get royalty payments from, and separately calculated by, Chesapeake, Anadarko and Mitsui. My neighbor is in the same unit but he had leased his land to Chief. His royalties are paid by Chesapeake, Chief, Enerplus, and Radler.
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Permalink Reply by J. Kinney LandRights on
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You will see this more and more. A couple of the larger companies that have recently came to the area are non operator oil and gas companies. They don't have rigs (maybe in the future) but they lease or buy leases then work out JV's and other non working agreements with companies that have the equipment to produce their leaseholds. I feel this is good for the play in general because that is going to bring more money and investors to the area that can partake in the drilling without equipment and that alone could have positive impacts for landowners, jobs, and communities.
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