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# Oil/Gas/Lease notation

Question
QUESTION: This is for a well that has been drilled-

What is the difference of a lease name of "Smith" vs "Smith Unit" Does the Unit mean that they may come back and drill parts of it again to expand it? I have seen a few leases in the Madison County Texas with Unit in its name and the drilling company coming back to drill another well off the first lease but taking some of it to put in the new unit. So basically allotting some of the minerals under the first well to count towards the new well. I dont think acreage is an issue here.

ANSWER: Naming something a unit could mean that the operator is taking in a large number of acres for multiple wells.  I have worked a 2400 acre "unit" in Oklahoma that had more than 20 wells on it but I also have experience with a "unit" in Johnson County, Texas where the operator had to pool together more than 100 small tracts to form a drilling unit and in these rarely was more than one well drilled.

The keys to look for would be:

1. One substantially successful well that they are going to expand from;
2. More than 1,000 acres in the "unit" to allow room for multiple wells; and/or
3. A declaration from the operator filed with the railroad commission or the county indicating a multi-well unit. (Depending on the stage at which the operator is currently working)

Bottom line - calling acreage a unit could go either way - determinative factor being the number of acres in the "unit".

---------- FOLLOW-UP ----------

Acres are in the 200-500 acre range so nothing huge. Woodbine is the formation and I think a 704 acre max size. The first well is 350 acres in the woodbine and they are drilling next to unit in 250 acres but 50 of those acres are in the first well of 350 acres . Same driller on both wells. Just confused on why they would do that and if its called a "unit" does that always mean they will do it? If I was the mineral owner on the 50 acres I would be double dipping?

The 50 could be where the surface location is...if it is a horizontal well.  I don't know if they need a horizontal for the woodbine - I thought those were primarily vertical wells.  I would  protest since adding the additional 50 acres is diluting the royalty for the rest of the unit.  The only reason I would not protest if each unit were producing from different zones.

200-500 acres isn't too large but if they are "oil" wells the spacing should be no more than 80 acres for each well.  You could be looking at a unit situation there.  Check your lease form and you'll likely find they are limited to 80 acres for an oil well.  The 704 max size is for natural gas wells being 640 acres plus or minus 10% - but that is for gas only.
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Oil/Gas

Volunteer

#### Cliff Williams

##### Expertise

I will try to answer any question you have. Even if I reject a question, I still will give a shot at what I would do in your position. The only questions I will not take a shot at would be a highly technical engineering or geological question. I am beginning to see quite a few questions from land men and other oil companies and that doesn't matter to me either. I will attempt to help.

##### Experience

I am an oil and gas attorney that has been in the business for more than 20 years. I have held a series 22 and 63 securities license, been in oil and gas operations, land man, division order analyst all prior to obtaining my law degree. Today, I typically write title opinions verifying ownership of oil and gas minerals, assist landowners in negotiations on oil, gas and mineral leases, easements and conveyances. I also assist oil and gas companies with the sale of working interest ownership as well as common business law issues.

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State Bar of Texas, Member of the Tarrant County Bar and the Dallas County Bar Associations.

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Multiple oil and gas topical columns on ezine.com.

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I have a B.S. degree which I rely upon more than my Business Mgmt degree or Law degree...

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Husband and father of 26 years