In reading about oil and gas production, i run into two items that i think are related but not exactly the same.
The first is the number of acres in the lease. The second is the number of acres in the unit - which I think is the same as what the Texas RRC calls the proration unit.
Would appreciate any explanation or insight from the Forum members on the difference between the lease size and the unit size.
Thanks.
BGS:
The size of the spacing unit, which is normally 640 or 1280 acres must be approved by a State Agency via an application from the majority operator. The acreage owned in this unit, by the individual mineral owners if referred to as "net mineral acres". These figures are used to determine the mineral owners royalty amounts in the event a well is drilled in the spacing unit. If you own 40 NMA in a spacing unit with 1280 acres, then your percentage would be .03125 or 40 divided by 1280.
Charles,
Thanks.
So - if I am understanding it correctly - a unit could have more than one lease in it (if the leases are small), and a lease could have more than one unit in it, if the lease is larger than the unit.
Right?
BGS:
Spacing units normally have one or two sections. Each section contains approx. 640 acres. If your NMA is located in the section, you will be a part of that unit, sharing a fraction (whcih depends to the amount of NMA you hold) in that unit.
BGS said:
Charles,
Thanks.
So - if I am understanding it correctly - a unit could have more than one lease in it (if the leases are small), and a lease could have more than one unit in it, if the lease is larger than the unit.
Right?
That is correct, more than likely, as in my case, you would have smaller lease acres with in the spacing units. Even if your lease acres are larger than the spacing unit, you would only get proceeds based on your acres owned in the spacing unit that the well is producing in.
BGS said:
Charles,
Thanks.
So - if I am understanding it correctly - a unit could have more than one lease in it (if the leases are small), and a lease could have more than one unit in it, if the lease is larger than the unit.
Right?
Dear BGS,
Since you are referencing Texas properties, you will find your answers here:
http://www.mineralrightsforum.com/profiles/blogs/the-basics-of-pool...
Also, contrary to what others have said about Texas units -- there is nothing defined as a spacing unit in Texas. Before anybody disagrees with me, read the RRC rules and regulations.
Hope this also helps:
(1) 40 acres (in the shape as hereinafter provided) around each well situated on the leased premises which is either producing oil in paying quantities or is being reworked, which is classified as an oil well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval between the surface of the land and the depth of 9,000 feet below the surface. Each such oil well and the 40-acre tract surrounding same as herein prescribed shall constitute and be referred to herein as a "shallow oil unit".
(2) 80 acres (in the shape as hereinafter provided) around each well situated on the leased premises which is either producing oil in paying quantities or is being reworked, which is classified as an oil well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval greater than 9,000 feet below the surface of the land. Each such oil well and the 80-acre tract surrounding same as herein prescribed shall constitute and be referred to herein as a "deep oil unit".
(3) 160 acres plus an acreage tolerance of 10% thereof (in the shape as hereinafter provided) around each well situated on the leased premises, which well either (i) is producing gas in paying quantities, (ii) is capable of producing gas in paying quantities with all shut-in gas well rental having been paid thereon, or (iii) is being reworked and is classified as a gas well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval between the surface of the land and the depth of 6,000 feet below the surface. Each such gas well and the tract surrounding same as herein prescribed shall constitute and be referred to herein as a "shallow gas unit".
(4) 320 acres plus an acreage tolerance of 10% thereof (in the shape as hereinafter provided) around each well situated on the leased premises, which well either (i) is producing gas in paying quantities, (ii) is capable of producing gas in paying quantities with all shut-in gas well rental having been paid thereon, or (iii) is being reworked and is classified as a gas well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval between the surface of the land and the depth of 6,000 feet to 9,000 feet below the surface. Each such gas well and the tract surrounding same as herein prescribed shall constitute and be referred to herein as a "deep gas unit".
Each such gas well and the tract surrounding same as herein prescribed shall constitute and be referred to herein as a "deep gas unit". Each such tract around each such well shall be in as nearly a square or rectangular shape as practicable within the configuration of the outer boundaries of the leased premises. The oil well on each such oil unit shall not be located nearer than four hundred sixty seven (467') feet to any outer boundary of the tract surrounding same. The gas well on each such gas unit shall not be located nearer than four hundred sixty seven (467') feet to any outer boundary of the tract surrounding same.
Thanks for the very helpful link.
Ron,
Thanks for the info.
It appears the wells I am interested in - on the Davila Graham lease south south west of Lenz and and between Kenedy and Coy City in Karnes County - are in the condensate window of the EFS.
From what I can tell, the unit is 320 acres. That would be consistent for the 320 acre unit size you mentioned in item (4).
Based on the well spacing (500 feet between the two wells that have been permitted) it appears that Marathon is planning 60 acre well spacing. Assuming these wells produce at an economically attractive rate, does that mean MRO could place up to 5 wells in the 320 acre unit?
Ron Hicks said:
Hope this also helps:
(1) 40 acres (in the shape as hereinafter provided) around each well situated on the leased premises which is either producing oil in paying quantities or is being reworked, which is classified as an oil well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval between the surface of the land and the depth of 9,000 feet below the surface. Each such oil well and the 40-acre tract surrounding same as herein prescribed shall constitute and be referred to herein as a "shallow oil unit".
(2) 80 acres (in the shape as hereinafter provided) around each well situated on the leased premises which is either producing oil in paying quantities or is being reworked, which is classified as an oil well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval greater than 9,000 feet below the surface of the land. Each such oil well and the 80-acre tract surrounding same as herein prescribed shall constitute and be referred to herein as a "deep oil unit".
(3) 160 acres plus an acreage tolerance of 10% thereof (in the shape as hereinafter provided) around each well situated on the leased premises, which well either (i) is producing gas in paying quantities, (ii) is capable of producing gas in paying quantities with all shut-in gas well rental having been paid thereon, or (iii) is being reworked and is classified as a gas well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval between the surface of the land and the depth of 6,000 feet below the surface. Each such gas well and the tract surrounding same as herein prescribed shall constitute and be referred to herein as a "shallow gas unit".
(4) 320 acres plus an acreage tolerance of 10% thereof (in the shape as hereinafter provided) around each well situated on the leased premises, which well either (i) is producing gas in paying quantities, (ii) is capable of producing gas in paying quantities with all shut-in gas well rental having been paid thereon, or (iii) is being reworked and is classified as a gas well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval between the surface of the land and the depth of 6,000 feet to 9,000 feet below the surface. Each such gas well and the tract surrounding same as herein prescribed shall constitute and be referred to herein as a "deep gas unit".
Each such gas well and the tract surrounding same as herein prescribed shall constitute and be referred to herein as a "deep gas unit". Each such tract around each such well shall be in as nearly a square or rectangular shape as practicable within the configuration of the outer boundaries of the leased premises. The oil well on each such oil unit shall not be located nearer than four hundred sixty seven (467') feet to any outer boundary of the tract surrounding same. The gas well on each such gas unit shall not be located nearer than four hundred sixty seven (467') feet to any outer boundary of the tract surrounding same.
Dear Mr. Hicks,
Would you please reference the proper RRC rules and regulations to back up your post? This looks like pooling restrictions contained in many oil and gas leases, which has nothing to do with statutory density requirements.
Hope this also helps:
(1) 40 acres (in the shape as hereinafter provided) around each well situated on the leased premises which is either producing oil in paying quantities or is being reworked, which is classified as an oil well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval between the surface of the land and the depth of 9,000 feet below the surface. Each such oil well and the 40-acre tract surrounding same as herein prescribed shall constitute and be referred to herein as a "shallow oil unit".
(2) 80 acres (in the shape as hereinafter provided) around each well situated on the leased premises which is either producing oil in paying quantities or is being reworked, which is classified as an oil well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval greater than 9,000 feet below the surface of the land. Each such oil well and the 80-acre tract surrounding same as herein prescribed shall constitute and be referred to herein as a "deep oil unit".
(3) 160 acres plus an acreage tolerance of 10% thereof (in the shape as hereinafter provided) around each well situated on the leased premises, which well either (i) is producing gas in paying quantities, (ii) is capable of producing gas in paying quantities with all shut-in gas well rental having been paid thereon, or (iii) is being reworked and is classified as a gas well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval between the surface of the land and the depth of 6,000 feet below the surface. Each such gas well and the tract surrounding same as herein prescribed shall constitute and be referred to herein as a "shallow gas unit".
(4) 320 acres plus an acreage tolerance of 10% thereof (in the shape as hereinafter provided) around each well situated on the leased premises, which well either (i) is producing gas in paying quantities, (ii) is capable of producing gas in paying quantities with all shut-in gas well rental having been paid thereon, or (iii) is being reworked and is classified as a gas well under the Rules and Regulations of the Texas Railroad Commission, and which is producing from any interval between the surface of the land and the depth of 6,000 feet to 9,000 feet below the surface. Each such gas well and the tract surrounding same as herein prescribed shall constitute and be referred to herein as a "deep gas unit".
Each such gas well and the tract surrounding same as herein prescribed shall constitute and be referred to herein as a "deep gas unit". Each such tract around each such well shall be in as nearly a square or rectangular shape as practicable within the configuration of the outer boundaries of the leased premises. The oil well on each such oil unit shall not be located nearer than four hundred sixty seven (467') feet to any outer boundary of the tract surrounding same. The gas well on each such gas unit shall not be located nearer than four hundred sixty seven (467') feet to any outer boundary of the tract surrounding same.