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Guide · Mineral owners

New Mexico spacing orders and pooling, for mineral owners

If a horizontal well two sections away has started paying you, or a landman has told you your minerals are "in a unit," a spacing order is the reason. It is the single document that decides which tracts share a well's production and in what proportion, and it is public.

What a spacing order does

The New Mexico Oil Conservation Division (EMNRD), on an operator's application, establishes a spacing unit: a defined area that one well or a set of wells is allowed to drain. Everyone who owns minerals inside the unit shares in every well drilled in it, in proportion to their acreage, whether the wellbore crosses their tract or not.

How New Mexico units are laid out

In the Delaware Basin (Lea, Eddy) horizontal spacing units are typically laid out as 320-, 640- or 1,280-acre "horizontal spacing units" along the lateral; San Juan Basin gas sits on 320-acre standard units. Because federal and state tracts are so common, a New Mexico unit is often a communitization agreement rather than a simple Division spacing order.

Why your decimal looks the way it does

Your royalty decimal on a unit well is your net mineral acres in the unit ÷ total unit acres × your royalty rate. A 40-acre tract in a 1,280-acre unit at a 3/16 royalty is 40 ÷ 1,280 × 0.1875 = 0.005859. When operators enlarge a unit for longer laterals, the denominator grows and each owner's decimal shrinks — while the number of wells that pay you usually grows too.

Pooling

Inside a unit, owners who have not leased can be pooled by order under NMSA 1978 § 70-2-17: the Division pools interests in a spacing unit by order; an owner who does not participate is carried and pays a risk charge out of production — historically 200% of costs — before receiving working-interest revenue. Whether to lease before a pooling hearing or to go unleased is a real decision with real money on both sides; get advice from someone who works in New Mexico specifically, because the rules differ state to state.

How to find the orders that touch your tract

Orders are indexed by case or docket number and by the sections they cover. The practical way in is by section: find every order that names your section, township and range, then read the unit boundary and the wells approved in it. Our map shades approved units and lists their wells where the state publishes the geometry; click your section and the units that include it appear with the order reference.

What to watch

Common questions

Do I get paid if the horizontal well doesn't cross my land?

Yes, if your tract is inside the well's spacing unit. Production is shared across the whole unit by acreage, not by where the wellbore runs.

Where can I read the actual New Mexico order?

On the OCD website under the case or docket number. Our map keeps the order reference on each unit so you can go straight to it.

What happens if I ignore a pooling notice?

You are pooled anyway, on the statutory terms rather than terms you negotiated. In New Mexico that means before receiving working-interest revenue.

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