What Happens When Other Company Drills Across Our Land?

There is a company starting to drill a well not far from our property, which we have leased with a different company. The 1st companies map shows the path they plan to drill starts at the corner of that other property, then more than 70% will be drilled across our property (we have 200 acres). It goes right through the center of our property.  I called the company doing the drilling (Chesapeake) and they don't return our calls. Also called the company we have a lease with (20% royalties) and they don't get back to use either. 

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Replies to This Discussion

Permalink Reply by Clinton44 on May 28, 2012 at 12:50pm

Thanks Frank,

Wow, glad I am not with Talisman,

Permalink Reply by scott brion on May 26, 2012 at 10:33am

I did a quick search of the courthouse records and it looks like your lease was assigned to Chesapeake, Anadarko and Statoil by a assignment recorded 5/4/12 at the courthouse.  I have a copy and can email you if you like or you can find it at the courthouse as instrument number 201210837.

Chesepeake is now the operator and can put you in its drilling unit.   Oddly I did not see a drilling unit recorded, but feel free to contact me if you have specific additional questions. 

Permalink Reply by Dr. Larry A. Maxwell on May 26, 2012 at 12:37pm

Ty Scott. yes Id love a copy of that. It's strange I spoke to the courthouse and they said they didnt have anything recorded.  I am surprised talisman assigned our lease to Chesapeake. The seismic tests and the thermal maps indicate we have the highest concentration of gas in the whole Marcellus Shale. We were told by Talisman they were going to drill at least 3-4 pads on our 200 acres.  The Yost Well starts on the corner of their property and then comes to ours and is on our property for more than 70% of the well line.

It is a little discouraging because Talisman said we would not be pooled and we would get 20% royalty on 100% of the gas taken out. Now if we are pooled, though we are the ones with the large reserve of gas, we will be getting much less, depending on how many acres are in the pool. 

Permalink Reply by LW on May 26, 2012 at 1:08pm

You can probably get more information at  Chesapeake offices in Towanda.

Permalink Reply by Ken Barton on May 29, 2012 at 9:34am

Dr. Maxwell-Unless the lease specifically limits pooling, any tracts less that 500-600 acres are going to be pooled in the Marcellus.  You do realize that your bonus is based on your percentage of acreage to the entire pool, so, technically, you are receiving the full compensation for your acreage.  If the pool is 600 acres, for example, your royalty is 20% times the volumn of gas produced times the selling price, multiplied by your percentage of the pool-in this case 200/600, or 1/3rd.  I don't really understand your statement about the highest concentration of gas in the Marcellus-this sounds like a sales job.  It is not realistic to believe that your 200 acres is any more viable or rich that any contiguous tracts.  The richness of the Marcellus is in the thickness of the shale, which may be very thick in Bradford County, but that thickness would also apply to surrounding tracts.  Generally, Northeastern PA has a thick Marcellus layer, but, as I said, that layer would apply to surrounding tracts, also.  If your information came from a Landman, representing Talisman, I will tell you that Landmen do not know where a well will be located, how many wells willl be utilized and how much of your property will or will not be pooled.  Add to this the fact that a well location can only be proven to be good after it is drilled and produced.  The good news is that if that leased has been assigned, as one of the other posters has noted there should be a description of the unit, with your lease and interest on file in the courthouse.  It sounds like, even though the circustances were not exactly as you had envisioned it, you are being drilled and, hopefully, you will be an integral part of a very productive unit.  Good Luck!

Permalink Reply by Doug Duffield on May 29, 2012 at 8:39pm

I know it was slip of the finger but bonus has no bearing on acreage in a pool, royalty is a different matter, when division orders com you will see what your royalty decimal interest in the unit is.

Permalink Reply by Ken Barton on May 29, 2012 at 11:18pm

You're exactly right-royalty should have been used in place of bonus in the 2nd sentence.  Thanks for the heads-up.

Permalink Reply by craig on May 29, 2012 at 10:50pm

The seismic tests and the thermal maps indicate we have the highest concentration of gas in the whole Marcellus Shale. We were told by Talisman they were going to drill at least 3-4 pads on our 200 acres. 

Seismic and thermal maps are just that, indicators. Actual drilling could show something completely different. The second sentence proves once again the old adage "Don't listen to what they say, watch what they do."

Permalink Reply by Jim Litwinowicz on May 31, 2012 at 1:32pm

Dr Maxwell; keep in mind that if and when more wells are drilled in that unit, even wells that do not touch your property, you will get royalties from them also, based on the percentage of the unitized property that you own. You said you own 200 acres. If the unit is 800 acres, you will be paid 20% of the value of 25% of all gas produced by that unit.

For every million dollars of product produced by that unit, your parcel will be credited for $250,000 and you will be paid 20% or $50,000. If five wells produce a million per month each, then you will receive $250,000/month. All numbers are hypothetical. Your results will vary.

You get royalties from all wells in a unit, even ones drilled away from your property. So you will get money from gas that doesn't come from your property. In the end, it all evens out.

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