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