Jason,
A well is permitted for a certain size drilling unit, which contains a certain number of acres. The well is presumed to drain that acreage, but it is not presumed to drain lands a mile away. That determination is approved by the COGCC as part of the permitting process. Every mineral owner in the drilling unit is entitled to receive their share of the oil and gas value extracted from the unit, after expenses are paid. That's why the interests would be pooled, either by agreement, or involuntarily if there were some mineral owners who would not sign leases. If you had leased your minerals for a certain number of mineral acres in the unit, you should have been paid your royalty, based on your share of the minerals acreage - for example (but oversimplified), if your mineral acreage was 1/10 of the total acreage in the drilling unit, you would be entitled to 1/10 of the value received for the oil and gas extracted and sold, times your royalty percentage.
If you had the money to drill and chose to drill a well on your own land, and the drilling unit was 100% owned by you, then you could keep 100% of the value for the oil and gas extracted, but you would also have to bear all the expenses, and all the risk. A vertical well in the area can will easily cost several hundred thousands of dollars, and up to a million or more, to drill and complete. A horizontal well will cost several million dollars.
Oil and gas exploration is not for the faint of heart, or for those without deep pockets.
I suspect your land was not in the drilling unit for the successful well you described. Many or most of the drilling units for vertical wells in Moffat County were only 40 acres in size.
Ken G
Jason Doll said:
Ken G.
I appreaciate your response, and I understand the greater good that is served by unitization and pooling. Let me ask you this. There is an old well on my family land in the Danforth Hills formation. It never produced anything. However, less than a mile away on neighboring property there is another well in the smae formation that has been producing significantly for years, and is still producing. How come we were not pooled and compensated?
Jason
Ken G. said:Jason,
You can't expect to find a lease without a unitization or pooling clause, unless you own 100% of the minerals in a whole lot of acreage. Your land will be combined with other lands because a well drains a lot of acreage and all mineral owners in that drainage area have a right to be paid for their share of the minerals that are extracted.
Some areas of Moffat County are just wildcat areas, where the risks are large and so are the costs of exploration. If you are in such an area, be happy that someone is willing to take the risk, and possibly spend millions of dollars, with no guarantee of success, and that you have a chance of receiving a nice royalty, if they are successful. Royalties from a good Moffat County well can be paid for decades.
Ken G