A spacing exception is regulatory permission to drill a well closer to a lease or property line, or to another well, than the standard spacing rules normally allow — known in Texas as a Rule 37 exception — granted to prevent waste or to protect a mineral owner's correlative rights when the standard spacing would leave minerals stranded or exposed to drainage.
Regulators set spacing rules — minimum distances a well must sit from lease lines and from other wells — to prevent waste and protect owners. But rigid spacing does not always fit the ground. A tract may be too small or oddly shaped to place a well at the standard setback, or minerals near a boundary may be draining away with no lawful well able to reach them. A spacing exception is the safety valve: permission to place a well closer than the rules normally allow.
In Texas this is the well-known Rule 37 exception (setback from lines and wells); other states have their own equivalents. It is granted case by case, on a showing that the exception is needed to prevent waste or protect correlative rights.
The two classic justifications are the same ones behind spacing itself. To prevent waste: allowing a well where the standard location would leave recoverable oil and gas stranded. To protect correlative rights: allowing an owner to drill a well to recover their fair share when a neighboring well would otherwise drain their minerals — a spacing exception can be the answer to drainage that the setback rules would otherwise block.
So an exception is not a loophole; it is how the regulator reconciles fixed spacing with the goal of letting each owner recover their fair share.
Because a well drilled close to a boundary can affect the neighbors, spacing-exception applications typically require notice to nearby owners and operators, who may protest and trigger a hearing. Adjacent owners get a chance to object if the exception would let a well drain their minerals or otherwise harm them. The regulator weighs the competing interests before granting or denying.
For a mineral owner, receiving notice of a spacing-exception application near your tract is a signal worth understanding — it can mean development is coming, or that a nearby well may affect your minerals.
A spacing exception can work for or against you. It may be what allows a well that develops your minerals on a small or awkward tract, or it may allow a neighbor's well close to your line. If you receive notice of an application, understand which side you are on and whether to participate. A significant spacing matter — especially a drainage concern — is worth a qualified oil and gas attorney's input.
Buckhead Energy considers spacing and any exceptions when evaluating how a tract will be developed. This page is educational information, not legal advice.
Oil & Gas Encyclopedia — all terms
Educational information only — not legal, tax, or investment advice. Consult a qualified attorney, CPA, or landman about your specific situation.
Regulatory permission to drill a well closer to a lease or property line, or to another well, than the standard spacing rules allow. In Texas it is a Rule 37 exception. It is granted to prevent waste or to protect an owner's correlative rights.
The Texas term for a spacing exception — permission to place a well closer to a lease line or another well than Statewide Rule 37 normally requires. Other states have their own equivalents. It is decided case by case.
To prevent waste (allowing a well where the standard location would strand recoverable oil and gas) and to protect correlative rights (allowing an owner to recover their fair share when a neighboring well would otherwise drain their minerals).
Usually yes. Because a well close to a boundary can affect adjacent owners, applications typically require notice to nearby owners and operators, who may protest and trigger a hearing before the regulator decides.
Understand whether it helps you (a well that may develop your minerals) or affects you (a neighbor's well near your line that could drain your minerals), and decide whether to participate or protest. A significant spacing or drainage concern is worth an attorney's input.
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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