“such pooling for an oil well which is not a horizontal completion shall not exceed 80 acres plus a maximum acreage tolerance of 10% and for a gas well or a horizontal completion shall not exceed 640 acres plus maximum coverage of 10%”
What adverse affect, if any, does the amount of acreage have for the Lessor…in the past, the numbers were 40 acres and 640 acres respectively with no tolerance percentage.
In general, I am probably not understanding the pooling clause and its affect on the Lessors side of the lease.
Thank you for your opinions.
The language may depend upon the ability of the reservoir to produce. Typical oil spacing used to be 80 acres for an oil well and sometimes they downsized to 40 acres. That was for vertical wells. The spacing changes the denominator in your decimal amount equation. I wouldn’t worry about it if you are in horizontal territory as it won’t matter. If it is a shallow well, then you would prefer the 40 acres.
You should also consider what minerals you own. If you own an undivided interest in a 640 acre square section A, then you need to consider whether unit is half of Section A and half of Section B for a 2 mile lateral or all of Section A for a one-mile lateral. You do not want a single one-mile lateral well in Section A to hold 640 acres so the oil company has no incentive to develop. Also in Texas, RRC has allowed oil companies to declare any horizontal well in Phantom (Wolfacamp) field to be a gas well regardless of statutory definition of oil well vs gas well and all Ford, West field wells to be gas wells. If your mineral interest is very small, you will not have the same negotiating power as a large interest.
The state that you are in also matters. Tennis Daze is correct for Texas. In OK, most of the horizontal wells are spaced at 640, but a few odd ones, so you need to know what the plans might be.