Not all land in old lease was included in drilling unit.

I recently found something very interesting in the completion report for an old well on the ODNR website. Although the lease was for 42 acres of land, only 40 were included in the map for the well unit on the permit application. So instead of all of the land in the lease being HBP, only 40 acres are which means I should get a signing bonus for 2 acres if those are to be included in a larger unit. This might not be the case for many wells, but looking at the completion report for your well might help a few of you squeeze a few more dollars out of the g&o company that wants to unitize your HBP acreage in a larger unit.

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Replies to This Discussion

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 23, 2012 at 12:54am
This isn't necessarily true. If the 42 acres was all on one contract and the unit size was not restricted to 40 acres then the whole thing is likely HBP. To hold your land in perpetuity all that the lessee must do is put one acre in the unit, unless the contract stipulates otherwise. It's more common today that contracts have an "all or nothing" unitization clause added to it. Older leases however tend to not have such a clause. Check your old lease and see what the language says. If you're still unable to decipher it then have a competent attorney look it over.
Permalink Reply by hunter4440 on March 23, 2012 at 12:07pm

blah, blah, blah, blah blah

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 24, 2012 at 2:45pm
Doesn't seem like the most useful response, but hey, to each their own.
Permalink Reply by hunter4440 on March 24, 2012 at 3:44pm

Marcus... my response was not directed to you.... sorry

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 26, 2012 at 11:58am
No need to apologize. I just thought it was amusing.
Permalink Reply by Kathi Albertson on March 31, 2012 at 5:09am

First, I'm sorry to see that the reply from Shale Gale was deleted from this discussion.  It was much more informative than the last four bits of banter.  That being said, I do appreciate the first reply from Marcus.  In thinking more about the issue and looking up more about leases, I am thinking that this is where the Pugh clause comes in.  Am I correct in thinking that if we had included a Pugh clause in the original lease, the two acres not included in the drilling unit would then have been free after the primary term?  And since we did not include it, all acres are HBP?

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 31, 2012 at 7:38am
Kathi, the Pugh clause was traditionally used for landowners who had large tracts of land and didn't want one 40 acre unit to tie up a larger (say 1000 acre) lease. Indeed, if you had a Pugh clause your 2 acres would likely be free. Since you do not it is probable that said 2 acres are part of the unitized lease, thus HBP.
Permalink Reply by Kathi Albertson on March 31, 2012 at 8:44am

Thanks Marcus, that is what I thought.  I'll try to get a Pugh clause put in if they try to unitize my current HBP acres in a larger unit.

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