This is a pretty common horizontal well setup and it’s confusing until you simplify it.
Royalty payments are not based on the well name or where the pad sits. They’re based on where the producing lateral actually runs underground.
In simple terms, your share is calculated like this:
First, they look at how much of the producing lateral is inside your unit and divide that by the total length of the lateral. That gives your unit’s share of the well.
Next, they figure your unit participation by dividing your gross tract acreage by the total acreage in the unit.
Then they take that number and multiply it by your mineral ownership and your lease royalty. That gets you to your decimal interest. Multiply that by total production and that’s how your royalty is paid.
So even though the well starts in one unit and ends in another, everyone gets paid based on how much of the producing lateral is actually under their unit and how much acreage they own in that unit.
As for why they split the lease into three units, it’s mainly to hold as much acreage as possible and to maximize lateral length and development options. One well can hold multiple units, and more units often make it easier to place longer or better laterals. It’s more about development efficiency than anything else.
On negotiating power, you do have some leverage if your lease is expiring and the well is planned to land on your property, especially with a pad already built. That’s usually when royalty rate and lease terms matter more than bonus. That said, it’s not unlimited leverage once they already have a drilling plan in place.
This is a very simplified answer to a complicated topic, but it should help you make sense of what’s going on.