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General Information |
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SPACING UNITS
A spacing unit refers to the area allotted to a well where an operating oil company has acquired a majority working interest and will drill at least one well. In North Dakota, this is typically 1280 acres or one mile by two miles commonly referred to as two sections. Drilling spacing unit (DSU) sizes are dictated by several factors including geology makeup, geography, and land ownership positions. As previously mentioned, North Dakota commonly has 1280 acre because 2-mile lateral wells provide the most economic recovery method for in place hydrocarbons. Referring back to mineral leasing, if a Mineral Owner were to lease 40 net mineral acres (NMAs) to Raptor Resources, Raptor Resources would then have 3.125% Working Interest (WI) on a 1280 acres DSU. (40 ACRES/1280 ACRES) = 3.125% WI Assuming the lease was negotiated at a 20% royalty, the deliverable net revenue interest would be 80%. Based on the royalty percentage, Raptor Resources Net Revenue Interest (NRI) percentage for the DSU would be 2.5%.(3.125% WI x 80%) = 2.5% NRI |
