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Author Topic: Looking ahead....  (Read 1025 times)


kenneth12

  • Posts: 304
Re: Looking ahead....
« Reply #1 on: July 22, 2017, 03:50:25 PM »
Hey wj, since things seem to change quicker than my brain can process them, help me to wrap my head around this "cross-lateral unit" concept.  I sort of picture, probably oversimplified, that for whatever reason the company decides to drill from say the pad on the Tague unit and go on to the Harvey unit.  Then, hey, since we're going through Tague anyway let's perforate that section as well as the Harvey section of the well?  Then somehow, by magic?, they determine the portion of this well's production that is coming from the Tague section, paying the Tague landowners that portion and the production that is coming from Harvey section and paying the Harvey landowners that portion?  Close?  Or more complicated than that?

aubrey

  • Posts: 14031
  • NEWBIE
Re: Looking ahead....
« Reply #2 on: July 23, 2017, 08:41:04 AM »
close ken, but the accuracy of their determination of percentage of production per unit cannot be reliably verified.

factors such as geology, drilling accuracy, and the efficacy of the frac stages in each unit may vary considerably.

overall, it's not a biggie, and may allow drilling where otherwise not possible. as with most aspects of the royalty game, there will be winners and losers, and as usual, we won't know which side of that equation we live on.

wj
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macal

  • Posts: 8885
Re: Looking ahead....
« Reply #3 on: July 24, 2017, 04:04:35 AM »



  Have any other companies beside Cabot proposed these cross lateral multi unit wells. I don't think it will be the norm but will be proposed in certain situations.

aubrey

  • Posts: 14031
  • NEWBIE
Re: Looking ahead....
« Reply #4 on: August 18, 2017, 10:02:15 AM »
more complicated than that?

the reasons that companies would like to drill these long cross unit wells are several.

longer wells bring economic efficiencies.

holdouts can be effectively, and permanently donut holed without much negative consequence.

in my area, there is a holdout landowner who owns almost completely across an existing unit. with this method, all surrounding lands can be drilled, eliminating permanently any need to lease that holdout. checkmate.

wj
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Dogbone

  • Posts: 1513
Re: Looking ahead....
« Reply #5 on: August 19, 2017, 05:01:09 AM »



  Have any other companies beside Cabot proposed these cross lateral multi unit wells. I don't think it will be the norm but will be proposed in certain situations.
Yes.  Proposed, but not put into practice..................yet.

GONRA

  • Posts: 228
Re: Looking ahead....
« Reply #6 on: September 27, 2017, 03:36:40 PM »
GONRA sez - who cares - as long as Royalty Cheques go UP.

kenneth12

  • Posts: 304
Re: Looking ahead....
« Reply #7 on: September 27, 2017, 05:36:25 PM »
GONRA sez - who cares - as long as Royalty Cheques go UP.
Weelll...  Don't forget that your check will still be based on your percentage of your acreage in a unit.  Longer lateral, higher overall production but that is offset by a larger unit and hence a smaller percentage for your said land.  If your neighbor has a higher producing area than yours, you may see an improvement in your check that would be made up by your neighbor who now has a corresponding reduction in his check.  Impossible to sort that out. 

wj has pointed out some more critical factors to consider.

aubrey

  • Posts: 14031
  • NEWBIE
Re: Looking ahead....
« Reply #8 on: September 29, 2017, 08:46:08 AM »
cross unit drilling should not affect unit size.

your unit boundaries will remain the same, and where the wellbore crosses the unit boundary will be the extent of your interest (royalty payment) from that well. the remainder of the well will be paid to the adjacent unit.

if you are in the unit from which the cross unit well will be drilled, there will be no advantage to you as a mineral owner.

if you are in the adjacent unit, and the well will produce from otherwise inaccessible shale, the well will benefit you.

in either case, you will have to take it on faith as to the accuracy of the proportional allocation of production in each unit. in other words, you'll just have to trust the gasco to figure out whose gas is whose. that brings up an issue over which we have little knowledge, and no control. what if the portion of the well in my unit was drilled and completed in good fashion, but the other portion got messed up? my gas will then be paid to the other unit. of course the opposite is just as likely.

if I were in a unit which can be drilled without problems, I would demand payment for the agreement. otherwise, there's nothing in it for me.

wj
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