We currently have a lease with SWEPI for our mineral rights in Moffat County. Our lease gives the leasee the right to join our acreage with a larger unit, which they are planning on doing. They have invited us to join our royalties with this large unit. Our question is what happens if we do not join our royalties with this large unit how will this effect our royalties?
Reggie,
The key to your decision may be in determining how your royalties will be calculated from unit production. The percentage will remain the same but getting to that point could be determined by acreage, deposit volume, or other technical determinants. Ask SWEPI to explain by example, how your royalties joined in a unit will be calculated. In any event, the unit distribution determination will most likely require approval by the Commission.
Thank you for your reply Gary.