Bad faith pooling

The original lease, signed in 2007, included a production unit clause for no more than 640 acres to be included for the drilling of a natural gas well in the state of Pennsylvania. When it comes to developing new wells from the original well pad, can the natural gas company violate the original terms of the lease by deciding to drill new wells that exceed the 640 acre pooling/production unit clause? It would appear that if a natural gas company had an intent to drill say a 1,200 acre production unit, their surface acreage capture would enhance their own bottom line profit while minimizing the royalties they needed to pay the landowner because the landowner’s percentage of ownership in the “pool” would consequently be so much smaller. Could a company actually do that?

While your personal royalty percentage would be less in a larger unit, the Company doesn’t really benefit since they are now paying your neighbor royalties as well.

Ideally, a 2 mile long well (1280 acres) should produce twice as much gas as a 1 mile long well (640 acres), so you should come out the same either way.

Longer laterals are more profitable for the Operator since they get more productive (horizontal) footage relative to their unproductive (vertical) footage. If you want to encourage more drilling, you might want to reconsider your 640 acre limit.


Given the timing of the original pooling, a two section well would have been pie in the sky and technology wasn’t quite there yet, hence the original ask. PA law may have changed and allowed larger spacing units. Many pooling have to be amended in order to get larger. Do some research and see if there is an amendment.