Drilling Unit Size Does it matter to your lease?

You bet it does. Depending on the amount of acres you have leased. Vertical or horizontal well and drilling unit size. 80 acres, 640 acres, 1280 acre unit size. What if you have leased you 200 acres. They establish a drilling unit for a vertical well of 80 acres. Your other 120 acres are left out of royalty. Still under lease but not counted in royalty % times acreage for total royalty amount payment.

This is where the wording of the lease is important. Do you have a pugh clause? A no orphaned acreage clause? OR maybe a pool all clause. IT all matters in the lease you sign and the amount of acreage you have.

Or say they establish a 1280 acre drilling unit. They include your 200 acres, and land around you with your neighbors to get to the 1280 total. They put in one pad and drill one well on the pad. They will literally tie up all 1280 acres with only one well if they wanted to. Granted this is not a wise use of acreage, but it could be done without the right language in our lease.

So beyond the bonus dollars the wording in the lease is very important.