I posted info on the issue a couple of years ago and there will be more and more. The approach makes sense in the respect of a common pad reaching across a single or multiple units. As a matter of fact Texas has current pending legislation to create a uniform standard. The reason this need further definiation is there are some operators that are only perferating part of the lateral and not all. Under this approach one could argue only the royalty owners within the perforated portion are due royalty.All have to remember there has to be a lease in place to establish the royalty rate that is then a percent of the footage of owned acreage over lateral footage from take point to take point.
It will come. We are also starting to see this in ND, CO, NM & OK. If the agreement is structured right, why not it's additional money. Without such an agreement there is well bore trespass. Each of you needs to be aware of any surrounding activity to ensure your fully and correctly paid.For example, a typical drilling permit will identify the land location of the well pad and it should also identify the land description of the end of the lateral. The net result is usually a much larger unit that can include anywhere from a couple hundred acres upwards to 2,560, depending upon state location. I have heard of a 12,000 acre unit application that was not approved.
It's one more thing for me to try to wrap my tired head around.
The deal with Cabot is that the units are assigned a percentage of the production depending on how much of the horizontal is under them. Simple calculation. Never said anything about fracing part of it. The other would be a dirty trick. Hmmm.
The key here will be to read and understand the proposed lease alterations before you grant permission for the operator to make ANY changes to the conditions of the lease. Me, I trust no one.
First is that the vertical part of the lateral is not perforated so the horizontal distance it covers to get to the Marcellus layer won't be part of the proportional equation.
A couple things. First is that the vertical part of the lateral is not perforated so the horizontal distance it covers to get to the Marcellus layer won't be part of the proportional equation. Second, are some of these companies still fracing just parts of the laterals. I know that was the case with CHK and Chief in the past to hold leases.