Why and how do Unit Agreements affect Indian mineral owners?
Your lease may be combined with other Indian, federal, state or private leases to form an oil and gas Unit Agreement. Unit Agreements are commonly used in the oil and gas business to economically develop production from large underground petroleum reservoirs. Most Indian lease terms contain provisions for parties to agree to unit agreements A Unit Agreement combines individual leases that cover one or more common underground oil and gas reservoirs to make a larger area for development. Two or more operators will form a Unit Agreement and designate a unit operator to develop the overall unit. There are two types of units: exploratory and secondary recovery. Exploratory units are formed in areas where the potential for oil and gas is suspected but, as yet, unknown. In an exploratory unit, when a producing well is drilled, acreage around the well is designated as a participating area. Royalties from the production are shared, based on acreage among all leases within the participating area
