Received a Designation and Pooling Agreement- Please explain what this is in layman’s terms. Supposedly this DPU is beneficial to all mineral owners.
Please give the state, county and description such as section, township and range or abstract. Laws vary by state.
Texas, Howard, (SE/2) OF SECTION1, BLOCK 35T1S , ALL OF SECTION 12, BLOCK 35-T1S, AND ALL OF SECTION 13, BLOCK 35, TIS
THIS LETTER IS FROM SYNERGY LLC (LAFAYETTE, LA) ON BEHALF OF CHEVRON USA
Signola, First of all I will certainly defer to Ms Barnes as she is the professional. Designated Pooled Units or Agreements (DPU’s) are utilized with horizontal wells in order to determine the individual interests of mineral lease holders relative to the portions of each parcel that are considered part of the unit. Example: You have a 100 acre parcel that is of an irregular shape and the drilled horizontal well only passes under a portion of it, say 50 acres. That 50 acres would be in the unit along with all the other mineral owners with parcels along the horizontal drill path that may reach 2-3 miles or more. You may have multiple parcels in a unit that are calculated similarly. Each parcel is considered like the example above and determined as to the acres in the unit which is then totaled. Total acres in a unit varies greatly depending on the length of the drilled laterals and could be from 400 to 1200 or more as an example. The total acres in a unit is used in the Division Order (DO) formula to determine your individual decimal interest for payment which is another subject. Units are used by production companies to determine individual royalty payments over the large areas covered by horizontal wells versus the smaller areas covered by vertical wells. Hope that helps. I’m sure others in the industry will have further details and considerations.
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