help!!!units vs drill paths who exactly gets paid?

i have yet to have this question answered and its baffling me or maybe i'm too dense too wrap my mind around it.with the talk of putting a mineral rights owner or land owner in a "unit" of 640 or 1280 acres,it appears that only the people in the actual drill path are the ones to get paid.this being said the drill paths that i've seen posted by the state range between 140-180 acres roughly.so if your in a drawn up unit and your not in the direct drill path do you still get paid? or if your in a unit and your in an actual drill path from the drill pad in the middle of your "unit" do you get paid on the other drill path legs from that pad? and if the answer is that you have to be in the actual drill path, then what is the mineral right owners advantage to sign an addendum to their contract to bump there acreage unit size if they are going to be put in a unit to be held but not be in an actual drill path?

Views: 2722

▶ Reply to This

Replies to This Discussion

Permalink Reply by wyalusing jim on March 16, 2013 at 9:38am

every mineral owner within a production unit shares in the units total production from all wells within that unit according to their percentage of mineral ownership in said unit.

provided they are leased.

wj

Permalink Reply by paleface on March 16, 2013 at 10:14am

 Fang if the additional 640 acres is more productive than yours wouldn't that be a benefit ?

Permalink Reply by wyalusing jim on March 16, 2013 at 10:44am

" Fang if the additional 640 acres is more productive than yours wouldn't that be a benefit ?"

playing devils' advocate, the shoe could just as easily be on the other foot, so isnt that a wash?

wj

Permalink Reply by wyalusing jim on March 16, 2013 at 10:32am

"There is no benefit to land owners to increase the unit size to 1280 acres unless it is coupled with a performance clause. In other words the company has to drill so many wells within a certain period of time."

not entirely true.

the chief benefit of larger units lies in the chance of reducing risks associated with individual wells.

e.g.a larger unit should contain more/longer wells at full development, reducing the effects of bad wells on ones ultimate royalty payout. to that end, the span of development has no effect on risk reduction.

one benefit which might come from having wells drilled in your unit at later stages of a play is that advances in drilling and completion techiques could increase the eur's of those later development wells.(if you're still alive)

one big disadvantage is that if one is an older mineral owner he will likely see lower royalty payouts in his lifetime, due to the larger unit potentially being less developed by the time of his demise.

i also believe that it remains to be proven, (as some are apt to claim) that larger units with more/longer wells, will ultimately pay more per acre. there is afterall, only so much gas that can be recovered per acre no matter what the size of a unit/well is, and it stands to reason that twice the unit with twice the wells will still pay the same per acre.

wj

Permalink Reply by Kathleen on March 16, 2013 at 10:42am
One of the things the landman will say to a mi real owner is you up your chance of hitting a sweet spot.
It's too much like playing the lottery to me.
Now if they would put in writing what you mentioned about drilling so many wells in a certain timeframe than I personally would agree to a larger unit, otherwise, no.
Permalink Reply by paleface on March 16, 2013 at 11:11am

 One might say to the gas company that wants you to sign into a 1280 lets see the seizmic for the additional acreage ?

Permalink Reply by wyalusing jim on March 16, 2013 at 11:51am

yes, it's certainly up to individuals to decide according to their own specific needs/wants fang, i was trying to point out as many pros and cons as i could.

as for myself, i denied it due to my advanced age, and so far it has worked out great.

wj

Permalink Reply by wyalusing jim on March 16, 2013 at 12:17pm

thanks fang, someday i hope to be able to buy ya a beer and tell ya all about it.

or maybe we should collaborate on a book deal. i even have a title..."anatomy of a gas play, the landowners perspective".

wj

Permalink Reply by wyalusing jim on March 16, 2013 at 12:39pm

what?! you dont drink beer?

no way a guy named fang doesnt have a beer with a friend now and then...

wj

Permalink Reply by wyalusing jim on March 16, 2013 at 3:15pm

 

fang indeed! you pose me the most perplexing dilemna.

should the book, the articles or the screenplay come first?!

screenplay...that was a brilliant stroke. never even considered it in fact.

if there is to be much efficacy, a talkie should come out soon, lest it fall too far behind in the timeline.

but it would certainly garner more attention if it followed a novel of reputed quality.

indeed you have me vexed.

wj

Permalink Reply by Bluflame on March 18, 2013 at 2:56pm

wj,

 Obvious answer to your dilemma....the beer comes first!

BluFlame

Permalink Reply by wyalusing jim on March 18, 2013 at 10:46am

"

"... not entirely true. The chief benefit of larger units lies in the chance of reducing risks associated with individual wells ..."

"It has yet to be seen if there really is any significant risk between horizontal bores comings from the same pad. You may very well be inventing a risk when there is no risk or very little risk to speak of."

i agree that the risk is minimal, thus the wording, "chance of reducing risks associated with individual wells ..." i was referring to the off chance, and it has happened, that something would go wrong during the drilling or completion of the well, not the chance of the geology changing significantly.

" Even if your well was completed with older technology, the well can be re-entered and re-fracked with newer technology " good point, but that's provided the company actually does that. i'm sure that they'll do restimulations at some point to determine their efficacy.

"There is no good reason to wait to drill or want a big PU and be HBP with one lateral for decades unless you think the Price of Natural Gas & Oils will increase significantly and/or you are very young and/or you want to leave your royalties for your children."

i absolutely agree. i am not in favor of increasing unit sizes, but i was trying to be fair and present both sides of the issue.

in my own case, all of the units are well under 640 acres, and the financial advantages are immediately obvious.

wj

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service