How modern drilling technology affects mineral ownership and royalties.
Get Your Free Mineral ValuationHorizontal drilling has transformed the oil and gas industry over the past two decades. Combined with hydraulic fracturing, this technology unlocked vast reserves in shale formations that were previously impossible to produce economically.
For mineral owners, horizontal drilling creates both opportunities and questions. Understanding how these wells work—and how they affect your ownership—helps you make informed decisions about your minerals.
The well begins drilling straight down through shallow formations until reaching the target depth—often 8,000 to 15,000 feet or more.
Using specialized tools, the drill bit gradually turns from vertical to horizontal over several hundred feet, called the "curve" or "heel."
The well continues horizontally through the target formation. Modern laterals often extend 10,000 to 15,000 feet (roughly 2-3 miles).
The lateral is perforated and hydraulically fractured in stages to stimulate production from the entire length of the wellbore.
Because horizontal wells can extend miles from the wellhead, they typically require larger drilling units—often 640 acres (one section) or 1,280 acres (two sections). Your minerals may be pooled with many other owners.
The wellhead (surface location) may be miles from your property, but the lateral could run directly under your minerals. You're paid based on your position in the unit, not proximity to the wellhead.
Horizontal wells produce significantly more than vertical wells—often 10x or more. This means higher royalties from fewer wells.
Many formations have multiple productive zones stacked vertically. Operators can drill horizontal wells in each zone, meaning your minerals might be developed multiple times at different depths.
Horizontal wells create pooled units that combine multiple mineral tracts:
Your Net Mineral Acres ÷ Total Unit Acres × Royalty Rate = Your Decimal Interest
Example: 40 NMA in a 1,280-acre unit with 1/4 royalty = 40/1280 × 0.25 = 0.0078125
This decimal determines your share of all production from the well. If the well produces $1,000,000 in a year, you'd receive $7,812.50 in royalties (before any deductions).
Important: Larger units mean your interest is spread over more acres. A 40-acre tract represents a smaller percentage of a 1,280-acre unit than a 640-acre unit.
Horizontal drilling has generally been positive for mineral values:
Higher production volumes
Economic development of shale plays
Multiple drilling targets (zones)
Increased buyer interest
Larger units dilute individual interests
Fewer wells per acre overall
Faster decline curves
More complex royalty calculations
Get a free valuation to understand what your minerals are worth.
Request Your Free ValuationHorizontal drilling is a technique where a well is drilled vertically to a certain depth, then turned to drill horizontally through the target formation. This allows one well to access far more reservoir rock than a vertical well, dramatically increasing production. Laterals can extend one to three miles.
Horizontal wells often span multiple mineral tracts, creating pooled units. Your minerals may be included in a unit even if the wellhead is not on your property. You receive royalties based on your proportional interest in the unit, calculated from your net mineral acres divided by total unit acres.
A pooled unit combines multiple mineral tracts into a single drilling unit for a horizontal well. All mineral owners in the unit share proportionally in production. Units can range from 640 acres to 1,280 acres or more, depending on the lateral length and state regulations.
Horizontal wells extract oil and gas primarily from rock along the lateral wellbore. If your minerals are outside the unit, they should not be drained—the well only produces from within its designated spacing unit. However, if you believe your minerals are being drained, consult a petroleum engineer or attorney.
Horizontal drilling has generally increased mineral values in productive areas. These wells produce more oil and gas per well, generate higher royalties, and can develop reserves that were previously uneconomic. Areas with active horizontal drilling programs typically command premium mineral prices.
Disclaimer: This information is for educational purposes only and should not be considered legal, engineering, or financial advice. Consult with qualified professionals for specific questions about drilling operations affecting your minerals.