units in Tyler Cty. WV

Antero has approached us wanting to put a pad on our farm. We received a map from them showing

the units coming off this pad, Our unit is half the size of the other units, they told us we would have

approx. 2 wells & the other units would have 3 but we would have a share in the other units. My

question is why is our unit the smallest unit when the pad will be on our farm? Thank you,Connie

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Permalink Reply by Heidlebergman on November 6, 2015 at 5:19am
More than likely it is just a coincidence. It's either they couldn't lease or acquire all the acreage to create a larger unit, they couldn't get all the heirs to agree upon a large enough pooling agreement therefore they had to split the units up or there's a geological reason (drilling down dip the anticline, or there's fractures or faults in the shale and they are avoiding them). There's thousands of potential reasons...
Permalink Reply by Suzy on November 6, 2015 at 6:07am
Hi Bonnie. What is the area of your land in Tyler County? We have some too.
Permalink Reply by Bonnie Beem on November 6, 2015 at 8:02am

Between Bearsville & Mountain, where are you located?

Permalink Reply by Suzy on November 6, 2015 at 9:21am

Hi ... Thanks for the reply.  We are on Buck Run and Antero is in the area.

They bought and are buying leases from Triad/Magnum Hunter ...

One thing I have learned, with working closely with Nancy Mosley on our holdings,

and Kyle ... we 'innocents' need an Attorney in Gas&Oil to review any contracts we

get from the Oil Companies. I would recommend it with you ... since they are close to actually drilling and doing something.  Congrats!!

Permalink Reply by Suzy on November 6, 2015 at 9:22am

Boy, that word spacing above ... came out weird ...

Permalink Reply by Bonnie Beem on November 6, 2015 at 3:26pm

Suzy,Thanks for the info. we have been going back & forth with Antero for

over a year concerning this pad, I will be glad when it is over one way or the

other.

Permalink Reply by Suzy on November 10, 2015 at 10:03am

Good Luck ...

Permalink Reply by William Dotson on November 10, 2015 at 9:52am

Be very glad. The smaller the unit, the larger the percentage ownership per acre and the larger the check. When you have a real small piece of a unit you are low rung on the pole for royalty payments.

Permalink Reply by Suzy on November 10, 2015 at 10:09am

Hi William ...

I have my Stupid Hat on today, being Tuesday ...

you referenced a 'smaller unit' having a larger check ...

but low on the ladder for royalty checks?  Do you mean 

a smaller well on the pad gives a larger check?  Two different

'units' referenced?  Again, wearing My Stupid Hat. 

Permalink Reply by William Dotson on November 10, 2015 at 10:54am

Let's say you have a 5 net acre tract. If all of it is included in one unit, your interest in the unit is 5 acres / # unit acres. So as a percentage, the larger the unit, the smaller the percentage. You would have a 5% interest in a 100 acre unit, but only a 2.5% interest in a 200 acre unit. This fraction, whatever it may be, times your royalty percent is your interest in every well that is included in the unit. So at 12.5% you would have a .00625 interest in each of 2 wells for a total well interest of .01250. And if the unit was twice as large, you would have a .003125 interest in each of 3 wells for a total well interest of .009375. In this case a unit half as large produced a total well interest that is 1/3rd larger than what it would have been with the larger unit, even with 50% more wells. Assuming all the wells produce about the same, you are usually always better off with a smaller unit size.

Permalink Reply by William Dotson on November 10, 2015 at 11:10am

The low rung comment was aimed at small royalty checks only get cut once, twice or 4 times a year. And yes, it is the size of the check per well that determines that. So again, you want the highest interest per well you can get.

Permalink Reply by Suzy on November 10, 2015 at 1:00pm
Thanks William. You sound very knowledgeable. It is a pleasure.

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