For a horizontal well, if a No Perforation Zone is approved to be removed, and part of the zone covers an abstract not leased, what happens?
I assume the lessee must track down owners of the additional abstract and either negotiate a lease or give them money as prescribed by state law covering this type of situation.
The no-perf zone will only be removed if the operator demonstrates the right to complete without violating RRC rules. You need to post more information to provide clarity as to your question. Are you an unleased mineral owner in one of several tracts crossed by the horizontal wellbore of a permitted well? Did you receive notice of a spacing or offset issue and did you file a protest at RRC? Notices to unleased or affected adjacent mineral owners, any protests, and the resolution are posted in the various permit filings. Most frequently the withdrawal of protests occurs upon leasing. The operator does not need 100% of all minerals to be leased to drill and some mineral owners opt to remain unleased and come in at payout. I am not familiar with a Texas statute which requires cash payouts regarding no-perf zones. Can you provide a citation?
Non-consenting cotenant. If the well is profitable you participate in revenue and costs after payout for your proportionate share.
TennisDaze, here are answers to your questions:
“Are you an unleased mineral owners in one of several tracts crossed by the horizontal wellbore of a permitted well?”
Yes. But my post is intended to help others in the same situation, as I don’t see it covered elsewhere here. The wellbore has a zone extending 330 feet on either side of it. A portion of the NPZ is in an abstract not leased. I assume it wasn’t leased and the NPZ was created to cover that because the company didn’t want to lease an entire abstract for such tiny coverage.
“Did you receive notice of a spacing or offset issue and did you file a protest at RRC?
No and no. The NPZ removal by the well owner is only in the request phase. I don’t know whether to care about the company having to pay mineral owners in another abstract unless non-consenting cotenants get paid much less than lessors, and those mineral owners can force the company to lease from them.
Can you provide a citation?
No.
The 330 feet is a spacing requirement on either side of the horizontal wellbore. An operator does not have to lease all the acreage within an abstract to drill, only the acreage within the spacing requirements. For example, if an abstract includes a 640 acre square section and the operator is drilling a well on 160 acres, then only the 160 acres needs to be leased. If your minerals within the abstract are not also within the 330 feet, then your minerals will not be included in the well and the operator does not need to contact you. Your reference to non-consenting cotenants vs lessors is not clear. Unleased mineral owners are treated as working interests and their share of revenues is applied to drilling, completion and operating costs until payout and then they receive all revenue for their interest and pay their share of costs. This is very different from leased mineral owners. Consider posting the well information and your specific question about the plat and NPZ.