I would appreciate it if someone could answer this question about pooled production in a lease - horizontal drilling.
This is sort of an extreme and simplified example, but am trying to grasp the concept.
Say there was a tract that was set up by the oil company that included property from 3 different leases.
Suppose there are 3 identical, contiguous 250 acres properties each with Owners A, B and C.
There are two wells being drilled that are only under Owners A and B land. A third well is being drilled on Owners B and C land. But all 3 leased properties are under a single tract in a 750 acre drilling permit.
Do ALL 3 Owners share in the production of all 3 wells equally (250/750)? Or is the production and revenue split based on the properties that the wells go on?
My apologies in advance if I use incorrect terminology, and I would be happy to try and clarify if I can.
If there is a DPU filed to create a unit, then that will set out the allocation method for wells drilled in the unit. If there is not a unit and these are allocation wells, then the production could be split in different ways. Most commonly by the percentage of the productive horizontal wellbore under each tract. Ask the operator if there is a unit or if these are allocation wells. If you identify the operator, county and wells, then you can get a more specific answer from someone familiar with the area…
Thank you TennisDaze - In my specific case, I believe there is a DPU (but just referred to as a “Unit” on the document). It is a map/plat that shows the total acreage in the unit and displays the unit boundary, the portions (acreage) owned by each of 5 leases where this “unit” crosses the lease boundaries.