If someone is in a pool say of 800 acres and a drilling permit is made on 200 of those acres
what happens to the other 600 acres.
A production unit may be approved after drilling and testing that may be different from the 200 acres. The remainder of 800 acres may be developed at a later date. Lease language will be a key to your answer.
Gary L. Hutchinson said:
A production unit may be approved after drilling and testing that may be different from the 200 acres. The remainder of 800 acres may be developed at a later date. Lease language will be a key to your answer.
Gary L Hutchinson
Minerals Management
Thank You Gary
Hopefully you insisted on a pugh clause so all that is not in the unit will be open after your primary expires.
Example, I purchased minerals in Colorado in 3 sections and all are being held by one 40 acre spaced well but I am only getting paid for the mineral interest I own in that 40 acre unit and all the rest of my minerals are for now worthless and have been worthless for 20 years since the previous owner sign a lease without a pugh clause. The operator farmed out my non producing minerals and they made a lot of money off my minerals, I made nothing when everyone else around me received $500 per acre lease bonus when the Niobrara craze moved in and the operator had the gall to say everyone else is a crook while he held 1920 acres on one little 40 acre well.
Bottom line is have separate leases for all your tracts and have various clauses in your leases.
Yes, a Pugh Clause is mandatory for a mineral owner's perspective when more than a handful of net mineral acres (NMAs) are at stake. This is a clause that says at the end of the Primary Term of the Oil and Gas Lease any of your acreage that has not been incorporated into a drilling unit must be released to you so that you can try to get somebody else to develop your other minerals not in that drilling unit. Without this clause, the Operator can take as long as he darn well pleases to develop the minerals underneath the 600 acres, as long as there is production from the 200 acres that ARE in the drilling unit. You can see how this is not very fair to the mineral owner.