I am new to using this forum. I have leased mineral rights in Block 2, H&GN Ry. Co. Survey, Sections 21 and 23. My present lease agreement limits the oil company to a maximum of 80 acre pooling for oil wells. I have received a letter requesting to change the lease to allow a maximum of 640 acre pooling. The rational is that this larger pooling is needed for horizontal drilling in the area. Are there any pros or cons to changing a lease from 80 to 640 acre pooling? Any insight would be greatly appreciated.
I do not think it is possible to drill a horizontal well on 80 acres in this area. The smallest units that I have seen are 160 acres due to spacing requirements. Most are 320 to 640 acres. RRC sets limits on how close horizontal well bore can be to lease or unit line. This was 467 feet but I think it has been reduced to 330 feet in the wolfbone field. The larger unit will give the operator more flexibility in locating wells in the unit as there are fewer unit lines restricting the locations. Since Wolfcamp formation has multiple zones, wells can look close together but really be separated by several 100 feet in depths. The concern that you will have about a 640 acre unit is to be assured that multiple wells will be drilled. You do not want operator to drill one well and then hold the acreage with no more development. One more note, you do not have to amend your lease to allow the acreage to be pooled, but can instead consent to the specific provisions of the unit agreement and acreage. This gives you the opportunity to decide whether the terms of the unit agreement are acceptable. For example, you may want to agree to pool the Wolfcamp formation, but not a shallow formation where spacing rules are 40 or 80 acres. Or you may want to be sure the acreage is in a square or rectangle that can all be drilled and not in an odd shape. Amending your lease will likely give the oil company unrestricted rights to pool.
Thank you for your help :) Tennis Daze