super well pads, multiple well pads
I have a question I have ask before, but have not had a clear answer. if the land owner has a well pad on there property, and their are multiple wells on the pad, does the land owner get royalty payments for all wells on the pad?
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Replies to This Discussion
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Permalink Reply by Frank Long on
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The answer is YES
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Not always but uncommon! Have been hearing about split unit where the pad is put in a corner of a property or near the boarder and are not in both units. My understanding is that it happens on other units too if the pad is located in a far corner of the property. Have read posts about these horror stories and know of one unit where they got the pad pad for the pad but do not receive royalties and were HBP for their whole farm b/c they did not have a Pugh clause they were stuck getting nothing more than for the pad being built!! Have to wait for another unit they were extremely upset!!
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Permalink Reply by Philip Thackray on
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The well pad owner has no special significance when it comes to royalty payments. The well pad owner will receive a royalty if his acreage is in a unit. Acreage can be split between units but cannot appear twice in multiple units. Normally, the well pad landowner will get a one time "setting fee" and may have negotiated a surface lease for the well pad property.
The royalty calculation boils down to this - " how many acres do you have in production units".
I also know of a situation like Beth described - a landowner with a well pad on their property but NO acreage in the unit to which the wells have been drilled.
Phil
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Permalink Reply by Donald on
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thanks for your input, I have heard the same storys about some of these well pads. I have brought this up earlyer, and was told that my thinking on well pads was rediculess and would never work. long story short.... I beleve all production that gomes through a well pad should pay the landowner a overideing royality regaurdless of weather the land owner is in all production unit or not .I an not talking about royalitys from G/O that is produced from your land. this would be any production generated from that well pad. this would have to be negociated at the time the well pad was put in place. I beleve it could be and should be. I have unleased land, and if I was to sighn a lease, this would be part of it. I think all landowners should think about this before sighning a lease. like mentioned earlyer, you could have a well pad with produceing wells and not be getting paid.
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Permalink Reply by Booger on
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you are correct that you could have a pad on your property with producing wells and not get paid royalties.......but as Phillip says - the gas/oil does not come from the pad, it comes from the ground that is fracked - same with the royalties.
the only way you could get royalties for every well drilled from the pad is if all wells were in one large unit (which is the case in a lot of places).
an overriding royalty for the reason you cite will not happen - "I beleve all production that gomes through a well pad should pay the landowner a overideing royality regaurdless of weather the land owner is in all production unit or not".... the same could be said for a pipeline..........however, if you ever lease your land, you could negotiate a spud fee for the use of your property for the pad - or put in a "no drill" clause and not worry about having a pad.
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Permalink Reply by Donald on
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Booger I think your main streem reasoning goes along with the old vertical well leases, which has carried over into the new horazontial drilling, but with muiltiple wells being drilled into differant formations, it's time for the landowner and attourneys to catch up with the leaseing.
and yes the same could be said for the pipelines, and their are landowners being pad for the g/o that crosses their land. not unheard of but not the norm. it's called wheelage.their was a GMS member that wrote about this several times, his name Was Fang.... as you may recall. seems he droped off the end of the Earth, haven't heard from him for some time. just my slant on things, if your negociating a lease for your 200 acres you might want to think about this.
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You get royalties on all the wells in YOUR unit. You should receive paperwork that outlines where in the unit you are.
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Permalink Reply by Donald on
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it is understood you get royalties from the wells in your unit. it is the wells that are producing millions of dollars for the o/g company's that you are not being paid for, but are being produced through the pad on your property. I'm not suggesting you should get 20% for production that is not in your unite, but i am suggesting you should get some compensation for all o/g produced through your land/ pad.
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Permalink Reply by jason irvine on
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You obviously will get royalties off your land but I do not believe you get royalties off the pad. If the pad is on your land then you should have been compensated separately
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Newer leases that I have seen contain payment for the pad being on your property. Our lease had $30,000 payment if pad is on our property. I have seen one with $25,000 too. We have a small property so we were fairly sure the pad would never be on us anyway. Problem is that if everybody in the unit does not have payment for pad in their lease then the pad goes on the property of those who do not have it in the lease. Older Clinton type well ... well there was really no pad and it was gone as soon as the one well was drilled and the pump jack installed. If you have a large pad that will eventually have 6,8, 10 or even 12 wells over the next ten years that pad and fence and driveway etc are not going anywhere. If you didn't have payment for pad on your property in lease you will only get royalties from the wells in the production unit you are in ... unfortunately ... even if a second production unit is going off the same pad in the opposite direction. imho
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