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Drilling Spacing Units (DSU's) represent areas represented on a spacing order or other unit designation within which operators drill wellbores to extract minerals.
The statutory minimum is 1/8th or 12.5%, but it may be as high as 1/4th, or 25%. Since the 1990s, Oklahoma royalties have typically been at least 18.75 percent, but 20 to 25 percent is not unheard of for Oklahoma mineral owners.
A Pugh Clause terminates the lease as to the portions of the land that are not included in a unit if the lessee does not conduct independent operations. Therefore, the Pugh Clause requires the lessee to develop areas of the lease that are not included in a unit.
In Oklahoma, mineral rights can be separated from surface rights. An owner of a parcel of land can sell and lease the rights to the minerals beneath the surface. Moreover, these rights can be fractionalized across a number of owners. In the Sooner State, the mineral estate is the dominant estate.
A spacing unit is an area allocated to a well to drill for and produce oil or natural gas. Spacing units are established by statewide laws and regulations, and are governed by Article 23, Title 5 of the Environmental Conservation Law (ECL).
A spacing unit is a legally described boundary designated by a governmental agency (the Oklahoma Corporation Commission (OCC) in the case of Oklahoma)) as a ?common source of supply? of oil and gas for purposes of dividing fairly, among the various owners, production from a particular well or wells.
?Drilling unit? means an area of a pool. established by the commission under AS 31.05.100 , either by order or by regulation; to which no more than one oil or gas well may be drilled; and. from which no more than one oil or gas well may produce.
The acreage area that can be used to drill a well. The size of the unit depends on the spacing rules and well densities under the field rules of the particular jurisdiction.