A spacing unit refers to the area alloted to a well where an operating oil company has acquired a majority working interest and will drill at least one well. In North Dakota, this is typically 1280 acres or one mile by two miles commonly referred to as a two sections.
Drilling spacing unit (DSU) sizes are dictated by several factors including geology makeup, geography, and land ownership positions. As previously mentioned, North Dakota commonly has 1280 acre because 2-mile lateral wells provide the most economic recovery method for inplace hydrocarbons.
Referring back to mineral leasing, if a Mineral Owner were to lease 40 net mineral acres (NMAs) to Black Bear Resources, Black Bear Resources would then have 3.125% net working interest on a 1280 acres DSU (40 ACRES/1280 ACRES). Assuming the lease was negotiated at a 20% royalty, the deliverable net revenue interest would be 80%. Based on the royalty percentage, Black Bear Resources net revenue interest percentage for the DSU would be 2.50% (3.125% x 80%).
To further explain the DSU concept, please refer to the diagram below.