Need Help with Royalty Division


#1

I can find nothing on this, so probably is a stupid question, but here goes. I have been pondering a situation where lets say there is a pool of oil directly beneath the dividing line of your and a neighbors mineral rights. They drill a well say 5 feet off the property line to get mostly in the center of the pool. Obviously “they” are sucking YOUR OIL as well as theirs. Is there some mechanism that would make them pay you royalties even though the well is located on a neighboring property, or does this mean you should drill a BIG hole 5 feet inside YOUR mineral rights to get more of it than they can? How does this work?


#2

Every state regulates the location of wells in relation to the lines of the tract. They also regulate the minimum number of acres to drill, depending on the formation - in Texas the acres can be found under the field rules. On the other hand, if your neighbor leases , then the oil company is allowed to produce the oil and gas from a legal location, whether or not there is any drainage from adjoining tracts. This is called the Rule of Capture. You should join NARO - National Organization of Royalty Owners - and the state group(s) where you own minerals. Good reference materials and newsletter. There is a national convention with seminar breakouts and many states hold their own conventions. These are designed to be educational and you will be able to talk with other minerals owners. Texas NARO convention will be in San Antonio from July 18-20 this year. Look at all the seminar topics on website. There are some great speakers. National NARO will be in Denver in October.


#3

Thanks again, you sure help me understand all this. I joined the NARO, $150 seems expensive, but I am hoping it becomes an expense that pays me back!