Bottom of the Hole

I have property that I have leased that they will soon drill a well on. The pool of oil is directly under my leased property. My brother also has mineral rights there. Someone told him that we would receive more royaly because our leased property was at the "bottom of the hole."

Is this just nonsense or is there anything to this?

You could potentially see more $$$ should the O&G company desire to use some of your surface acreage as their pad site (and if you did not give away surface usage rights in your original lease) , but it would not generally matter where your minerals are located within the unit as far as getting additional royalty. If your minerals are pooled in a unit, you would get the royalty amount negotiated in your lease contract pro-rated against the percentage amount of the total number acres that you personally own in the unit.

We don’t have suface rights and they have already purchased the pad site. I figured we would just get what the lease allowed. Someone told my brother this and since we aren’t up to speed on everything related to leasing I thought I would check it out.

Thank you for the information.

Everyone in the unit shares equally (proportionally). Your property may look better geologically, but you are either in or out, not in a superior position except as to number of acres in the unit. Surface rights would be the only mitigating factor, but are not a part of the equation here.