Replies to This Discussion

Permalink Reply by Kathleen on April 29, 2014 at 2:42pm

Hi,

This subject has had a lot of time spent on it here.
First everything goes by lease language.
I would assume and since I don't know a thing about this specific unit it is really just assuming, that this will be two units maybe three.
Each "declared unit will be drawn and lets just use 640 acres for reference. One well can hold that whole 640 acres and everyone drawn into that 640 acres shares in the royalties as their lease states.
You do not need to have the well under you, you just need to be in that "declared pooled unit" acreage.
Some declared pooled units are 1280 acres and one well can hold all those acres too.
Each unit being held by one well has room for more wells to be drilled into it.
Nothing changes in the "declared pooled unit" if another well is drilled, except now they have a chance of higher royalties since more product is being pulled up at one time.
Everyone's share of the declared,pooled unit will be turned into a decimal point which does not change at all with new wells being drilled in that declared pooled unit.
If one mineral owner owns all of the 640 acre declared pooled unit, their share is 1.
If someone owns 320 acres in that pooled unit, their share is .50 and it lowers like that to the smallest mineral owner.
Every once and a while a declared pooled unit can be amended to add a mineral hold out. So far I've only seen that done before royalities have started.
I hope that helps. If not, just go to the search box in the right hand corner and search for declared pooled unit. A wealth of information will come up for you to read. Please do not allow some posts saying the drilling has to happen directly in your minerals to receive royalties confuse you.

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Permalink Reply by kh on April 30, 2014 at 1:43am

Thanks Kathleen. Am I understanding that the entire platt will be divided into units in the end? My main question... because I have so many family members in this DEP platt of 1,387 acres is the possibility that some properties in the platt may not get into a unit of gas production and then never receive a royality check. But their ground will be locked up forever. 

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Permalink Reply by Philip Thackray on April 30, 2014 at 2:17am

kHogan,

I’ll add to what Kathleen has said.

1)    The “unit” as depicted on the well plats may not match the boundaries of the final unit(s).

2)    The G&O companies are fairly generous about bringing properties into units unless that property is best put in another unit.  That is because adding more acreage to a unit does not cost the G&O company any money.  For example, if every land owner has a 12.5% royalty and in month x the unit produces 1 million dollars, the G&O company will distribute $125,000.00 total to all the landowners in the unit.  If the unit is 500 acres or 640 acres the same $125,000.00 are distributed.  This very thing happened in the unit of which I am a part.  Many small properties on the edges of the unit were included in the unit even though the proposed wells were not going close to their properties.  I joke around the house that they did this so there would be a few less protestors at the local township meetings!

3)    A single well pad can serve multiple units and the well pad need not be in the unit.

Post the well platt and you may get comments from local landowners that could help flesh out the possible unit boundaries and acreage inclusions.  Just remember, units are malleable.  The one I’m in changed quite a bit (for the better I think) after the “declaration of unit” was recorded with the county registrar.

Good luck!

Phil

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Permalink Reply by kh on April 30, 2014 at 4:07am

Thanks Phil. Can a gas company split part of a property out of a unit completely. Or did Act 66 last year prohibit that going forward? We have a 125 acre farm in the platt and my husband is sure we will end up with 2 acres in a unit and the rest locked up.

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Permalink Reply by Philip Thackray on April 30, 2014 at 4:42am

Khogan,

 

My point in #2 above is that the G&O company does not save money by limiting the acreage in the unit.  If your local G&O company is doing an orderly development in your area, all your acreage and your families acreage should eventually be in a unit.  If there are leasing holdouts near your property that might limit access to portions of your property then that could be a near-term problem.

 

Here in Butler County, PA it is relatively easy (from your computer) to find out who is leased and who is not, and to get copies of drilled and proposed well plats and previous established units.  Map the units, wells (with laterals) and leasing status for your area and you will see patterns emerge. 

 

Phil

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Permalink Reply by Kevin on April 30, 2014 at 6:02am

Which Gas Co. and where? They seem to do different things in different areas. I've seen them split into four units. NW, NE, SW, SE.

 

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Permalink Reply by kh on April 30, 2014 at 7:26am

Penn Energy,  Beaver County

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Permalink Reply by Kathleen on April 30, 2014 at 2:46pm

Hi,

If your lease does not have a Pugh clause in it stating only acreage in the unit can be held I'm sorry but all your land will be Held by production.
Meaning you only receive money in the 2 but all the land waits for another unit.

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Permalink Reply by kh on April 30, 2014 at 3:49pm

I have a Pugh claue.

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Permalink Reply by Kathleen on May 1, 2014 at 12:48am

If it reads only the minerals included in a pooled unit or any type of activity related to drilling, then only those minerals are held. The rest will be free of being held by production.

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