The June 24, 2025, Regular City Council Meeting for Pecos City, Texas, focused on the allocation of production from oil and gas wells in Reeves County. The meeting began with a detailed explanation of how production is allocated among various pooled units, specifically addressing the Balmorhea State unit and the City of Pecos 15 16 unit.

The discussion highlighted that there are currently four existing units in the area, with the Balmorhea State unit located on the western side of the plat. The allocation method involves determining the length of lateral crossing each track, which directly affects the royalty interests received by the city. It was noted that the city currently receives royalties from all four units, with a net revenue interest of 12.2% from the northern city of Pecos and 18.75% from the City of Pecos State 15 16 unit.

The council reviewed calculations indicating that the total net revenue interest shared between the two units is approximately 14.43%. Bison Energy, representing Civitas, submitted a Production Sharing Agreement (PSA) for the city to execute, which has been tabled for further discussion. The council considered the potential need for an oil and gas attorney to assist in understanding the legal implications of the agreements.

The meeting also addressed the timeline for executing the PSA with the General Land Office of Texas, which is scheduled for July 15. The council discussed the anticipated impact of five new wells on production levels, with expectations that these wells would significantly increase revenue for the city. However, it was clarified that existing production would not be affected by the new wells.

In conclusion, the meeting underscored the importance of the allocation method for determining royalties and the potential financial benefits from new drilling activities in the area. The council plans to continue discussions on the PSA and the hiring of legal expertise to navigate future agreements.