What determines which wells on a section I get paid for?

General Mineral Rights Discussion
1

I'm trying to figure out what determines whether I get paid on a well in a section.

Example: If I have mineral rights in the NE/4 of a section that I have leased and the lease states NE/4.

What determines if I receive income on wells that are located ONLY in NE/4 or the whole section. I have situations where they are both ways. Different locations, Different leases.

Would it be the spacing unit? If so, can someone tell me how it would work? i.e., if I own mineral rights inside a spacing unit, would I receive income on all wells in that spacing unit?

I really appreciate any help.

2

Without know what state, a vertical oil well could be on as little as 10 acres spacing, which could be inside a larger spacing. A gas well is usually on a larger spacing and could have other wells, oil or gas inside the larger spacing possibly producing from the same or other formations. I'd need a lot more information before trying to describe the rules applicable to your acres.

3

Yes, you will be paid a royalty for production emanating from ANY well in the unit, BUT you will get paid only on your pro rata share of your net mineral acreage compared to the net mineral acreage inside the entire unit.

4

So, if I own 20 net acres in the NE/4, my net acreage would still be 20 net acres regardless of whether the spacing order size is 640 or 1280? For some reason, I am having a tough time finding something that clarifies this whole spacing thing for me. Any help is appreciate!

5

Billy,

If you own 20 net UNDIVIDED acres in a 160 acre quarter section, you own 20/160=12.5% of the portion of the quarter section in a spacing unit. If a portion of the quarter section is in a unit, you own 12.5% of that portion.

If the entire quarter section is in a larger spacing unit, you own 12.5% of the portion that your quarter section contributes to the entire spacing unit.

If your 20 acres is undivided, you own 100 percent of that 20 acres and 100% of the portion all or part of your 20 acres contributes to the spacing unit. Hope that helps.

6

Mr. Hutchinson,

That is most helpful. Thank You so much!