Introduction
Mineral rights have the potential to appreciate in value significantly, especially when nearby oil and gas activity ramps up. One of the most impactful drivers of this increase is the drilling of infill wells—new wells drilled adjacent to or near an existing lease or producing unit. When an operator drills an infill well close to your mineral acreage, it can signal untapped potential beneath your land. This activity not only increases interest from other operators or buyers but can also lead to higher royalty payments if your minerals are eventually included in a new drilling unit. In this article, we’ll explore how infill wells work, why they matter to mineral owners, and how they can directly influence the long-term value of your mineral rights.
It’s All About Activation
By now, you are probably familiar with the idea that when activation occurs, mineral rights provide more revenue through larger royalties.
In terms of mineral rights, activation refers to when exploration companies initiate the development of oil and gas minerals through drilling new wells or infill wells.
The Money Maker: Infill Wells
Oil companies may decide to increase activation in certain areas for many reasons. If the wells they have already drilled in an area are showing strong production, they may want to exploit that area further by drilling additional infill wells alongside the original well(s).
Infill wells are particularly effective because data from the original well(s) provides valuable information about geology, pressure, and well behavior.
The original well had significant production and data indicates that the area has more to offer, so the operator decided to exploit the area further.
Two additional infill wells are drilled alongside the original well.
What is a Geological Zone?
As a mineral owner, you own the rights for subsurface minerals at all depths (unless otherwise stipulated in the mineral deed). This is important, because at different depths there are different geological zones, or formations, that may contain valuable resources. Geological zones are bands of subsurface rock with similar properties and characteristics.
EXAMPLE:
In this simplified example, the operator drills the first three wells through “zone 2.”
In a real horizontal well, the wellbore can be pivoted in any direction to maximize exposure to hydrocarbon-rich formations.
If the characteristics of these zones are favorable, multiple wells may be drilled on the same mineral acres in order to exploit hydrocarbon-rich zones at different depths. In some basins, there are many zones that are proven to be productive. For example, in the Anadarko basin there are the Springer, Chester, Upper Meramec, Lower Meramec, Osago, and Woodford zones.
EXAMPLE:
After the first three wells in “zone 2” are drilled successfully, the operator comes back to drill additional wells through another productive formation: “zone 3.”
END RESULT: In this example, the operator went from one well in the unit to six. This is a tremendous benefit for mineral owners in the area, who would go from receiving royalties from one well’s production to receiving royalties from six wells’ production. In some areas of the United States like the Permian Basin, it’s not unheard of to drill 12 wells in a single drilling unit.
What Does it Mean for Minerals to be “Undeveloped”
Minerals are considered undeveloped if they have not yet experienced activation. Eckard Enterprises aims to buy undeveloped minerals in locations where there are indicators that operators will develop the area such as filed permits, previous activity, strong performance of existing wells, the presence of significant oil reserves, and favorable geological features. By doing so, we acquire the right minerals for the right price.
Looking for…
PERMITS FILED
PREVIOUS ACTIVITY
STRONG PRODUCTION
GOOD GEOLOGY
SIGNIFICANT RESERVES
What Does This Mean For Your Money?
At Eckard Enterprises, we specialize in helping educate qualified individuals on mineral rights, working interest and other oil and gas related opportunities.
Whether you are already familiar with owning mineral rights and working interest or new to energy ownership, connecting with the team at Eckard Enterprises gives accredited investors access to more than 40 years of oil and gas expertise as well as a wealth of industry knowledge and educational resources.
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