Here is my take on the situation. Jetta Permian had 7 units with State leases where it had drilled a well. Each unit was about 2 sections. JP wanted to hold on to various state leases and not have them expire as to lower depths. GLO agreed to a 9454.86 acre unit which required set numbers of wells per year to be drilled over about a decade. Once drilling ceased, then any undrilled depths or acreage within the unit would expire and the DOI would be recalculated for remaining acreage and wells. All existing wells at the time of the creation of the unit continued to be paid on its sub-unit basis. JP sold out to EOG. EOG decided that it would be easier to keep drilling, but to pay all old and new wells on the sub-unit basis. Then at any time drilling ceased, everyone would continue to be paid at same DOI on the sub-units, rather than have to go through an amended DOI process for the whole thing so your DOI would change. Also, if EOG does not like one tract, it could drill elsewhere. Or EOG could sell out in parts to another operator. So they all agreed to amend back to original sub-units for royalty purposes, but at the same time any wells drilled on one sub-unit keep the leases in force as to undrilled depths or acreage in another sub-unit until the end of the drilling commitment. These massive units are messy and are really beneficial to the operator who does not have to pay new bonus for new leases.
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