Gaines County, TX Unitization Question

I have been contacted by White Rock Oil as a Royaty owner in North Jenkins Clearfork Unit in Gaines County, TX. They want to do a Secondary Recovery on certain wells , so want a Unitization agreement. Has anyone been contacted by White Rock, or, has anyone been through this Unitization process before?

Any advice, they sent a 20 page form. Thanks for your help.

I do not have rights anywhere close to there, but unitizations are common. It would be advisable to get an oil and gas attorney to review the document and explain it to you. Secondary recovery does extend the life of the field.

Thank you very much.

The unitization will change your decimal amount as your acreage is now part of a much larger parcel, but you get the benefit of the production from the other wells. A Texas oil & Gas attorney should take a look at the documents. I only have secondary recovery in OK, so cannot speak into a Texas unitization except to say that the secondary recovery in OK has been beneficial to our family’s bottom line.

One of my interests is supposedly in the process of becoming part of a secondary recovery (waterflood unit) in East Texas. This is from what I understand a rather lengthy process.

It would, as M_Barnes said, reduce my decimal amount, but would add some more existing wells to what I share in, so if the waterflooding is successful, might increase our royalty income.

You should review the depth clause to see that it is limited to the formation depth where the wells are producing. There is no reason to include deeper formations as this could limit your rights later. Read to see what will cause a termination of the unit, such as cessation of production without operations for some period of time - 60 days or 90 days or more, and see how that compares to your lease. Is that a longer period or shorter period? If your lease only cites cessation of production without a time period, then it could be better to have a set time. Look at language on the ability of the operator and other working interests to amend the unit terms. Older units generally were set in stone as to acreage and depths, but newer units often allow unlimited amendments. Your attorney can advise you on whether to ratify the unit with or without limitations.

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I thank you kindly for the helpful insights.

They made the statement that they want 70% affirmation to go ahead with the project.

That is pretty normal on the percentage. They want about two thirds of the tracts to say yes.

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