Am negotiating a lease of 3000 + contiguous acres. I want to break the acreage into approximate 640 acre tracts (each tract constituting a separate lease) with a unitization clause in the lease limiting horizontal units to 640 acres. the company is insisting on putting all the acreage in one lease and suggests my concerns about development would be adequately addressed in a continuous drilling clause which would provide that after the termination of the primary term the company must drill a well every 180 days, designating each well to a 640 unit. How do I respond? Is this OK to consider? How do I negotiate this. Thanks for your replies.
Bob:
Could you be more specific about where this mineral acreage is located (State,etc)? In recent cases I have dealt with, the norm is 1280 acre spacing on the majority of horizontal wells but I tend to deal with North Dakota and Montana areas. You have a large amount of acreage and this will definately be a huge bargining tool in negotiations.