How do I ensure that oil isn't being extracted from my land and not being paid for it?

Question

I am concerned that since there is this large pool of oil underneath the adjacent land to where I have mineral rights and the drill is next door to us that they could be removing it from one place while it stretches over several different areas of land including mine and not distributing the royalties accordingly. How does this work?

Answer 1

Well, I'm not going to say I'd be impossible, but I am going to hazard a few guesses (and I seem to be pretty good at adding my knowledge and logic into making pretty good guesses).  If what you mean is there are several pools of oil in your area, and you think that the rig may be able to (to some extent) maneuver it's bit.  I know there has been talk of a rig that can do something of the sort, but I don't know if it exsists, or how common it is, I'm no oil expert.  

If it is one big pool, and you know that it extends to your land, they could harvest it as oil in the pool adjusts, like taking water from a pool, it takes from the whole area of the pool as it is emptied.  If this be the case, then there must be some sort of formula involving how many cubic feet of the pool is in your land.  

I imagine the best way to find out would have to be the company itself though, as they are the ones who know the most probable shape, depth, size and other factors.  I'm sorry that this is so long, and still so hopelessly unhelpful, but I hope it did help at least a little bit.

Answer 2

well u just said it actually isn't your land so it doesn't really matter to me not that it would either way...

Answer 3

If the company doesnt want to lease your minerals, there is not a whole lot you can do about it.  As long as they are not using vertical drilling and depending on the spacing, it is not likely to affect the minerals underneath you.  The options you have are 1) Try to lease to your neighbors drilling company.  In order to participate in the production without them drilling on your land you will have to enter into a unit agreement.  This may depend on how your neighbors lease is structured as to whether you can even do this.  2) Convince the drilling company to drill on your land.  If you do not want your neighbor to participate in the production from your land, you will need a Pugh clause which prohibits unitization.  Whatever is produced from your minerals, you will keep.  If there is alot of oil under your neighbor and only a little under you, then you may lose out on some royalties.  Whereas with unitization, you would participate according to the acres of minerals leased and percentage of minerals owned as a fraction of the unit. Good for you if your neighbor produces alot and you dont.  3) Find a mineral broker or other drilling company and convince them to drill on your land.  If its in Texas (for which most of what I have written applies), look up your neighbors wells production data available at the texas railroad commission website.  Use that to negotiate with other producers and lease your minerals to them.  You should agree to a bonus which is an amount to be paid upon leasing the minerals in a per acre amount (eg 200-800 per acre) and a percentage of the royalties depending on the amount of royalty interest owned.  What you agree to depends what the going rate is in the area and potential production.  More than likely you will want to add a pugh clause to prevent untization. 4) Talk to a lawyer.  Hope that helps