I received an new Production Sharing Agreement for section 18 Block C-8 Section 9,10 Block C-8, Section 9 block C-8. Supposedly they are drilling 4 new wells. I am from Ohio and don’t understand much. In the agreement it says " Each Interest Owner further agrees that this Agreement affects only production of Horizontal Wells and in no way affects ownership under any vertical wells drilled or to be drilled on Subject Lands.
Is this normal? Other wells that we have include vertical wells.
The PSA sets out the method of allocating production and royalties to the owners of the tracts underlying the horizontal wellbores. This will determine your royalty decimal in the horizontal wells. The vertical wells have been drilled on different, generally smaller, tracts and the production is allocated only among those owners. Your royalty decimal will be different in the vertical and horizontal wells. The purpose of this clause is to keep the ownership and allocations of production from the vertical and horizontal wells separate. You would not want your royalty decimal in the vertical wells to be reduced by sharing the production with owners in another section.
We received the same agreement on the same exact sections. We are also in Ohio and don’t understand all the language and processes. Just curious if you found help from other places in addition to this site. Also curious if you signed the agreement?