Royalties and Horizontal Laterals

Oil and Gas Leasing Help
1

I’ve done a search and couldn’t find an answer to my questions. I’m learning about this whole process as I’ve only bought royalties a couple of years ago.

I recently spoke with a Comstock landman regarding mineral rights leasing. He advised me they are doing deep wells with horizontal laterals extending 2 miles (10,000 ft). After speaking with him, I came up with questions I need to have answered.

I understand that “rights”, such as water rights, any and all water underneath the boundaries of the rights, belongs to the holder.

Is the same for gas and oil rights? Rights as they exist, go to the center of the earth.

What occurs with horizontal laterals? Are laterals extended and gas or oil extracted from the entire length of the lateral, or just to a pocket, or pool?

If laterals extend through, or within mineral rights owned by an individual(s), is a company required to establish a lease with an owner?

As important, are they obligated to royalty payments? How is this determined?

If a lateral extends in/under mineral rights beyond the location of the drilled well, is the company required to pay royalties, based on the lateral extensions?

If so, how are royalty percentages determined? . Thank you.

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Water rights generally belong to the surface owner in most states.

Oil and gas rights belong to the mineral owner. They may go from the grass roots to the center of the earth depending upon the wording of the deed or the probate.

With horizontal wells, they drill a vertical portion and then make a turn and go “lateral”. The perforations are within the lateral section (think bendy straw) except for any easements determined by the state or when they go out of the spaced reservoir. It can be hard to keep the drill bit in the zone of interest.

The reservoir must be leased or forced pooled (depending upon the state). The royalty is determined by the lease or the pooling. Most folks in Texas want a 25% royalty. Other states vary. Depending upon the designated type of well (and the state), the payments are determined by the feet of lateral (or percentage of perforations) that cross your acres and how your net acres figure into the whole spacing unit.

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