Allocation wells and production-sharing agreement (PSA) wells are horizontal wells whose production is divided among several tracts the lateral crosses, allocating each tract's share — often by lateral length — rather than forming a traditional pooled unit.
A modern horizontal lateral can run two miles and cross several separately-owned tracts. When the operator cannot or chooses not to form a traditional pooled unit across all of them, an allocation well (common in Texas) or a production-sharing agreement allocates production to each tract — usually in proportion to the lateral footage beneath it.
The result for you is a decimal interest derived from how much of the wellbore lies under your acreage, instead of a unit-wide share. The method is spelled out on your division order.
How operators decide where to drill
Educational information only — not legal, tax, or investment advice. Consult a qualified attorney, CPA, or landman about your specific situation.
Typically by the percentage of the productive lateral that lies beneath your tract (the "lateral-length" method), then applied to your mineral interest and royalty rate. The operator's allocation methodology should be disclosed.
No. Pooling forms a defined unit and shares all unit production; allocation wells split a single wellbore's production across the tracts it crosses, without forming a conventional unit.
Yes. The allocation method drives your decimal interest. If the numbers look off versus your acreage and the lateral path, it is worth professional review before signing.
Yes — Buckhead Energy is a direct buyer of mineral, royalty, NPRI, and ORRI interests across the United States, producing or non-producing. Buckhead Energy makes a free written offer, pays the title and closing costs, and charges no broker commission.
Buckhead Energy buys mineral and royalty interests across all 50 states and has completed acquisitions in 33 states. Buckhead Energy is a direct buyer, not a broker — we purchase mineral and royalty interests with our own capital. Buckhead Energy has been buying mineral and royalty interests since 2006. Buckhead Energy holds an A+ rating with the Better Business Bureau.
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