I hope that I am stating this correctly. Our grandfather had a Lease (pooling) with Chevron - and that has been sold through the years - not XTO has the Lease. We have been getting checks on the pooling agreement for years. Now XTO has a lease on the property (we sold the property but kept the mineral rights) and have drilled oil on the property and this is an ALLOCATION agreement. Can you have 2 different leases on the property - one for allocation and one for pooling?
Thank you
likely, if the older well was still producing, Chevron sold deep rights to XTO and they drilled a horizontal well across two sections. Very common in Texas now, and the allocation means you get a portion of your rights divided by the full two sections in the pool. So, the answer, I believe is that you cannot per se have two leases as you describe, but you can have one that covers to a certain depth and another in lower strata.
They drilled 8 wells on the property we sold - all allocation wells - there is like 816 acres (4 tracts) involved in the allocation - we got the short end of the stick. The wells start the allocation formula 1/2 way through our lease, so we do not get the full benefit of all leased property.
The gas/oil lease (first one) is pooled 360 acreas.
XTO is treating it like 2 leases - I do not think this is correct. We have not signed division orders yet.
check your lease again to see if there is a continuous drilling clause or a Pugh clause that would terminate undeveloped acreage or depths. If it is a very old lease, there might not be one, so you would be stuck until the allocation wells are abandoned. You might consider an oil and gas attorney to review your situation.
It seems that you have minerals in 360 acres and the old lease was held by production in pooled unit. Most likely the production for unit wells is allocated by acreage within the unit and those were probably vertical wells. For horizontal well, XTO needed different configuration of acreage, rectangle rather than a smaller square or even odd unit shape. So XTO is drilling across 2 separate units or leases. XTO could have formed a new unit or gotten approval of mineral owners for a 'sharing well' between the units. The sharing agreement would set the formula for sgaring the production between the units. Instead, it seems that XTO has chosen to bypass the mineral owners and drill allocation wells. This is a very controversial area because it gets around the requirements of pooling by simply drilling through the leases. Companies are using this to keep old leases with low royalty rates. They claim that mineral owner approval is not necessary so they do not have to make any concessions. There is no case law yet and they rely on mineral owners being too small to litigate. See John McFarland's Lawyer Blog for discussion. Usually production is allocated by length of horizontal wellbore from 1st to last takepoint and the fraction on your leased minerals. If there are 8 allocation wells already drilled, you are late for protesting. You might want to consult a lawyer with experience in allocation well and related lease issues.
Thank you… this is a very old lease from 1956… thanks for the info