Changes to Unit Acreage and Effect on Decimal Interest

General Mineral Rights Discussion
1

I have an interest in an oil lease in LaSalle County, Texas. Originally the lease was to be 480.1 acres; however, before the well was completed the operator increased the size of the lease to 685.2 acres. What I don't understand is that the P15 on the unit shows the acreage assigned to the well is 520acres, but the P15 "acreage list" shows the total unit acreage to be 685.2 with 165.2 acres remaining. My question is: should the decimal interest be based on 520 acres or 685.2 acres. Would appreciate any insight as to how this works. Thanks.

2

Dear Mr. Edwards,

Assigned acreage on a P-15 has no title significance whatsoever.

What does have title significance is the provisions of the leases that contribute to the unit and the declaration of unit filed in the courthouse under the authority granted under the terms of the various leases.

For further information, go here and read the 3 part blog pieces.

http://www.mineralrightsforum.com/profiles/blogs/pooling-in-texas-p...

Best,

Buddy Cotten
3

Dear Mr. Cotten,

Thanks for the information; your blog was very helpful.

In reviewing the information I have on the lease, the P-12 Form shows that all parties are pooled in the 685.2 acres. The W-1 Form shows 480.1 acres; however, the change to 685.2 acres is reflected on a later W-2 Form. The P-15 Form shows 520 acres for proration purposes, and the "P15 Acreage List" shows the unit acreage to be 520 acres with remaining acreage of 165.2 acres.

I guess my question is: Is the decimal interest based on the entire lease acreage (in this case 685.2 acres) or the proration acres (520 acres).

Thanks for the help,

Jim Edwards

4

The participation will be based on the Unit Size as shown on the Declaration of Pooled Unit that has or will be filed in the courthouse. Unit Declarations are not filed with the RRC. When you read your lease, the pooling provision shows how pooling is accomplished.

We are going to make the assumption that there was a pooled unit to begin with.

If no lands were pooled, then you are paid on a lease basis.

Buddy

5

The Declaration of Pooled Unit shows 685.2 acres, so that's what the decimal interest will be based on.

Thanks,

Jim