during what stage of drilling (or better yet when) does an operator lease and or pool mineral owners? do they have to pool before they get a permit to drill, or do they pool or lease after the well Is spudded? this has been a question I've longed to have answered. Also Is there a good rule of thumb for time frames between Permit to Spud, Spud to Completing, Completion to 1st sale, 1st sale to division order, division order to payday? I'm sure the time frames vary between operators and states (I'm an Oklahoma mineral owner), but surely there are requirements/timeframes each stage has in the drilling process. I would appreciate any insight I can get on this, thanks in advance.
George, pooling and unitization laws vary by state. Please let us know what state you are interested in learning about.
Oklahoma is the state I'm interested in learning about.
The first royalty payments from a new well can take up to 9 months from first production while division order title opinions are being finished. After that checks should come 2 or 3 months following the month of production.
This website should have answers to most of your other questions.
I can't answer for Oklahoma, but in WV I can a little bit. I am going to assume things are sort of the same.
In WV the company does not create a pool until after the drilling is complete and the wells fractured. UNLESS-there is specific language in a lease...it could be any one of the many many leases that requires a preliminary unit to be surveyed and recorded signed off by the mineral owner. There are so many variables that go into the formation of a unit...OK is probably easier than WV...WV can be a mess both above and below ground.
In WV you have to a permit to break ground and you have to prove to the state that you have a reasonable plan to get the gas out in a safe and responsible manner. At some point around 2012-2013 the state was requiring a drilling plan (technically a unit) to be stored at the location at all times. They were requiring CNX at least.
In WV you cant spud a well without all the properties leased that the proposed horizontal well lateral plans to traverse. The pooling units are an organic process...they can change constantly....sometimes for whatever reason the company may only drill 4000 ft of the 8000 ft plan...due to one of a thousand potential reasons.
Between permit and spud in WV....Like I said you need a permit just to break ground....that includes road access as well. So depending upon numerous factors...it could be up to 2 years between permit and spud. After 2 years in WV the company has to reapply for the permit, which happens constantly. I don't know what the rule of the thumb would be...but in WV and at Consol we were always pushing that 2 years.
Spud to completion...In WV depending upon a few factors...at CNX we planned our laterals out for 15 days from spud to TD (Total Depth) ...that was for the Marcellus things may have changed in the last year or two, but 15 was the mean.
Completion to first sale. I wish I could answer this better. Once the valves were open up and gas was flowing...I believe we had 90 day to set the division orders and start cutting the first checks. When I was designing the units...I went by the DIvision Orders Manager's delegations...so she was on top of this not me.
You don't have to have a division order to sale gas. The division order is set up to pay the royalties. I am sure there have been times when gas was flowing through the meters and a DO hadn't yet been set up. Technically a Division Order is a title with all the mineral owners for each properties and their interest listed. A pool can cut through different leases thus dissecting the property that is where the survey comes in to set the unit. At CNX we were designing 160 acre units for 8000 foot laterals.
Hope this helps somewhat
Our wee company,
Is in the initiation of a "pooling agreement" and are still waiting for the "real details" and are prepared to deal with these "details" when they are presented and before we sign any kind of "agreement". Pooling agreements are somewhat complicated and the devil is in the details. You will be issued a warning of a forthcoming "pooling agreement" and when you receive such, need to seek professional help before you sign a "Pooling Agreement". A good Landsman or Lawyer experienced in such negotiations should be contacted when you first receive an alert and then consulted when the details come down prior to any requested signature.