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In A Unit, but Well is Not Under Me...

Posted by bernell on August 31, 2014

For some reason there remains a lot of confusion about how much revenue a mineral/royalty owner will get when in a unit, but the physical location of the well is not located on (under) acreage owned.

The fact is each mineral/royalty acre owner will get his proportional share of the revenue from a unit regardless of where the well is located within a unit.

That's answer won't be clear enough for some, so let me use an example from a unit with a map posted here this weekend.  See Welcome Pike County! linked below:

New Permits...and Welcome Pike County!

The Elarton unit includes all of sections 22, 27 and 34.

Let's suppose a well site is built in Section 27 just south/southwest of Elarton Road roughly in the east center of Section 27 and that a well will be drilled to the north toward the end of Section 22.  
Do you see it?

Right upper portion of the 3 section unit will half a well under it.  This well will drain oil from under it  for an estimated 300 foot either side of the lateral.

Now, let's assume you own 1 acre in the southwest corner of Section 34.  Your property is roughly 1 3/4 miles from the nearest point that oil is actually being removed from the TMS formation.

Got it?

Your acreage is nearly 2 miles from production, but you are in the defined unit.

You will receive just as much income from your 1 acre as an acre from which the oil is being produced.


What do you think about it?