I own mineral rights left to me by my father. They are located in Section 17, Township 1N, Range 6W in Stephens County OK. I received a Notice of Hearing about Continental Resources seeking "Pooling." First, I am a newbie, and have no idea how much acreage I own, how much it's worth, what "Pooling" means, and whether to sign a lease I've been offered. I've received calls from 6 different leasing agents in the past couple of weeks and so far the highest amount I've been offered to sign a lease is $2,750 with 1/5 (20%). I would really appreciate if someone would be able and willing to educate and give me advice.
Pooling is the combining of two or more tracts of land so that a well can be drilled. You have an interest in the acreage that the oil company wants to drill and you are currently unleased. As to what you own, the landmen offering to you leases can tell you what you own. Since there are more than one, you can compare their offers to see how many net mineral acres you own.
You are not required to lease or make a decision. However, the State of Oklahoma will do it for you if you do not make a selection.
The competition for leasing your acreage seems to imply that drilling is imminent. That is good news for you.
Your best move at this point would be to compare offers and have a lease form that protects you from damage and does some other positive things as well, such as making sure that your royalty share of production is not charged any post production costs.
Failing that and as a fallback if you simply do not have enough time, I would make an election under the pooling rather than hastily signing a lease. There should be several posts on how the pooling election works in Oklahoma if you use the search function at the top right of the page.
Thank you buddy and r w kennedy. The last offer I received was the highest up front payment so far. From what I understand they are ready to begin drilling and according to the geology survey I was told the soil shows positive results??? I'm confused as to where I go to learn how to participate in the "pooling election" process. Would you recommend I do that vs leasing? What are the pros and cons?
I'm sorry, I'm totally ignorant in all of this. What does is "pooling election"? If this is something I need to do, how do I go about it? I wasn't able to find any info on how or what to do.
Brie, you should receive instructions in the mail if you are unleased. In the pooling election you will select a bonus and royalty from a few choices and return your form to the OCC. If you are unleased and fail to make and return an election, a selection will be made for you, the highest bonus and the lowest royalty. I would recommend making an election in the pooling over signing a lease that you may not understand. The state may limit the formations that the operator may explore making it so that the operator would have to lease them separately in the future thus paying you again. The initial lease offer you receive will most likely be for all formations and if a producing well is drilled, all formations producing or not will be held by production and the lessee will not have to pay you a bonus in the future to explore those formations.
You could possibly get more in a lease, but not in the lease offer you initially receive, it would have to be negotiated.
Some knowledgeable people spend alot of time and effort in negotiating a lease and end up making an election in the pooling because they can not come to terms with the potential lessee.
Brie said:
I'm sorry, I'm totally ignorant in all of this. What does is "pooling election"? If this is something I need to do, how do I go about it? I wasn't able to find any info on how or what to do.
Following up on Bob Kennedy, there are typically 3 options that the OCC will offer. The final one being a $0 bonus lease and 1/4 royalty. If they make any type of well at all, the higher royalty is always the way to go to maximize returns. If they drill a dry hole, then you receive nothing. If you knew what would happen with the well, the decision is easy. Otherwise, it is a risk, UNLESS you can negotiate a lease with a bonus and 1/4 royalty. That would be the best of both worlds.
If you have a mineral interest in more than one section of land, only lease your interests in the section(s) that the Hearing Notice is for.
Since Continental is already proposing a well, finding out who has the best acreage position or who is the most active is pretty much a moot point. That would make sense in non forced pooling states, but not in a forced pooling state when you are at the hearing notice stage.
Thank you for the useful suggestions. In doing my research I found that if I do happen to own more than one parcel of land that I need to negotiate separate leases and that I should make sure a "PUGH" clause be added.
Do you think that a lease offering $2,750 bonus and 1/5 royalty is acceptable?
Brie, it depends on where the property is, whether wells have been drilled nearby, what those wells production is like and if you can find out, what others in the area have been offered and accepted. It's your property, you are the one who must be satisfied with the compensation. While the bonus may be important, the royalty surely is and the lease terms may be the most important thing of all to negotiate because the big print giveth and the small print taketh away.
How would I find out whether nearby wells have been drilled? As of today, I've received 8 more letters wanting me to sign a lease. That brings the total to date to 14 offers. I'm so confused I just don't know what to do or what all this means :/
OK, I just got another notice stating the relief sought is to vacate existing spacing and establish a new drilling and spacing units. What does this mean??? I also got another lease offer from Bearcat on different acreage I didn't know I had. This is regarding section 20-1S-5W.
Brie, I am going to recommend you join the Stephens county group, they are a good bunch and I believe they can give you the best help with finding out about wells near you. Look near the top of the page where it says groups.
That they are seeking to vacate existing spacing may mean that they will drill two section extended long lateral wells instead of one section long lateral wells. This is not something you need worry about because you will not be hiring a lawyer and a geologist and protesting. I believe you are receiving the notice as part of the effort of the state to be transparent. You could theoretically protest, if you had grounds.