My family has owns and receives royalties on shallow, vertical wells that have been paying for decades. Today I received notice that Casillas has a hearing for a new 640ac. horizontal spacing in the section. The notice is for our property (we are listed) and describes how this unit will co-exist with current verticals. My question is if they proceed will we be offered a new, separate lease for the new horizontal unit, or do companies just “piggy-back” current leases of the old verticals? Hope this post makes sense…lol. Thank you, as always for all the much appreciated information.
The answer to your question depends upon your original lease. If the original lease did not have a depth clause then you will probably be held by the terms of the original lease. If you were pooled to a certain shallow horizon, then you may be able to lease again at the deeper levels. Read your paperwork.
Development in this section started in the 1930’s, and the amount of activity since has been significant. If your predecessors didn’t pass on good records, you may be in for some heavy lifting just to figure out which units you are in and which lease(s) your interest is subject to. Good luck.
In our case the new horizonal well was held by production by the little vertical wells our relatives passed on and we didn’t get a chance to sign any new leases. I wish they had known to have depth exceptions and limitations in their leases like M. Barnes talks about here. They were just tickled to get what they got at the time with no thought about future wells and especially didn’t know about the future with horizonal drilling. I’m sure ours is probably held by production at 1/8th but we haven’t received any DO’s or checks from the new well that Casillas drilled that has been active for over a year now I believe. So we don’t know for sure about anything.