Question's regarding My Mother and 1 Neighbor's property:
My mother received Division Order for a Gas Well drilled on her property (120 Acres) from XYZ Exploration and she noticed they reduced her 50% mineral interest due to including 56 acres from her neighbor since they drilled the Gas Well 200 feet from neighbor's property line (120 + 40 acres = 160 + 10% = 176 acres total). However, according to the Texas RRC approved Drilling Permit it states that the Vertical Well would be located 470 feet from my mother's lease/property line, Depth is 6000 feet and not a pooled unit. The O&G Lease my mother signed was specifically for her 120 acre property.
Her neighbor has a total of 157 acres leased with same XYZ Exploration Company and he has 2 Oil Wells that have been producing since January/April 2013 and Oil Well #2 is located 410 feet from my mother's property line when I measured it on the Texas RRC Map (Oil Well #2 approved Drilling Permit states that the Vertical Well is located 500 feet from his property line, Depth is 5500 feet and not a pooled unit).
My mother is waiting on the Designation Form to see if her neighbor's 56 Acres will include Oil Well #2. If it does include Well #2 then will she be compensated for past (and/or current) production on that Well since it's within 467 feet of her property line?
I personally think that XYZ Exploration should have sent my mother Division Order's last year (January/April 2013) to unitize part (or all) of her property with neighbor's property due to Oil Well #2.
Robin,
These are complicated questions that would require review of a lot of documents, but you should start with your lease. Did it give XYZ the ability to pool without your mother’s consent? If so, did they form a unit? Those are the two preliminary questions you need answers to. The unit designations usually can be found on the RRC site.
Wade,
On the Drilling Permit (section #26 through #32 under FIELD INFORMATION List all fields of anticipated completion including Wildcat. List one zone per line) it has a list of 14 fields but there is not a P-xx Form attached regarding Unit Designation or Pooled Tracts. My mother received the Designation Form to add neighbor's 40 Ares but it doesn't include any Well's on his property due to the depth clause (neighbor's Well has to be above 4100 ft or below 4900 feet to be included). On my mother's lease she gets 0.5 MI x 0.2 and her neighbor's lease is his MI x 3/16 (or 0.1875) but that was changed when she received the Division Order due to the Gas Well location on her property is within 200 feet of neighbor's property/lease line. Seems like XYZ Exploration will end up with more than 4/5 (or 80%) working interest since her lease states 1/4 (or 20%) and neighbor's lease states 3/16 (or 18.75%). XYZ ends up with 81.25% (80% + 1.25%) and they should distribute the 1.25% between my mother and other mineral owner on her property. On the DO, my mother's NPRI was reduced to 0.0677784 (originally 0.1) due to including the neighbor's 40 Acres to her 120 = 160 + 10% = 176 Acres.
Wade Caldwell said:
Robin,
These are complicated questions that would require review of a lot of documents, but you should start with your lease. Did it give XYZ the ability to pool without your mother's consent? If so, did they form a unit? Those are the two preliminary questions you need answers to. The unit designations usually can be found on the RRC site.
Wade,
I need to make a correction on the following statement:
(neighbor's Well has to be above 4100 ft or below 5900 feet to be included)
Also, answer your question:
Q 1) Did it give XYZ the ability to pool without your mother's consent?
The Lease has a statement (#4) that the Lessee (XYZ Exploration) has the right to unitize any land to establish 80 acres including 10%. Also, mentions pooling to establish 640 Acres + or - 10% (I believe pooling is mostly used for horizontal drilling).
I'm sure this is a Standard Lease that most O&G Exploration Companies use.
Q 2) If so, did they form a unit?
Not to my knowledge, since she own's 120 Acres (both surface and minerals).
NOTE: I think they drilled the Gas Well on my mother's property within 200 feet of neighbor's property/lease line because they had to clear a lot of brush. However, they drilled the Water Well further into her property. Also, the Foreman stated that they will not be drilling additional wells on her property.