I was wondering if someone could please help confirm or clarify my interpretation. This is what my research has lead me to believe:
The drilling unit is applied for before an operator drills a well, and it is done to show that there is enough acreage available to drill a well and be within the density requirements required by the field rules. This does not require that all of the mineral interests in the proposed drilling unit be leased (such as a mineral owner holding out), but it does mean that the operator is limited to drilling just one well in the drilling unit. If the field is an established field, the drilling unit will likely be sized in accordance with the typical proration unit size for that field. Once the well is drilled, the RRC assigns a proration unit to that well. Meaning, that is the maximum amount of acreage that a single well can draw, and that only one well can be on a proration unit.
Once producing, only leased mineral owners within the pooled unit can receive royalties, unless they are an unleased mineral owner drillsite tract. Unleased non-drillsite mineral owners must either file a MIPA action or drill their own land to prevent their minerals from being drained. Both of which are difficult for the mineral owner. The pooled unit acreage does not necessarily have to encompass all of the drilling unit or proration unit tracts.
If the drilling unit is smaller in size than the proration unit, it could have the effect of precluding the mineral owners outside of the drilling unit from future production from that particular field. Thus, it is likely that leased minerals outside of the drilling unit, and within the proration unit, will actually be contractually pooled into a contractual "pooled" unit that serves two purposes: 1)it ties all of the acreage in the proration to the well in the drilling unit, preventing it from being leased to a 3rd party (perhaps tying up depths not covered by the original proration unit) 2)they share in production from the well in the drilling unit that they are not part of.
Is the above correct?