We have a problem, we own a royalty interest in a well in Texas and we were excluded from the lease when the contract was drawn-up between the oil company and the landowner. Our mineral interest is in the well that is producing, but it is directional and we were excluded in the lease.
Does anyone have any suggestions, is this legal, etc.
Thanks
Dear Ms. Thomas,
In the first sentence you said you had a royalty interest. In the second, a mineral interest. These are two very different things.
If you were not leased, you cannot be pooled under the terms of a lease, unless you either ratify a lease or ratify the producing unit. There are a few more in the blog posts linked below.
You might want to read this series to learn more or the mysteries of pooling in Texas.
http://www.mineralrightsforum.com/profiles/blogs/rule-of-capture-re...
http://www.mineralrightsforum.com/profiles/blogs/the-basics-of-pool...
http://www.mineralrightsforum.com/profiles/blogs/pooling-in-texas-p...
Best
Buddy CottenI miss spoke we own a royalty interest, I should not have used the term mineral interest.
In that case, strictly speaking, unless the wellbore penetrated the acreage where your royalty interest lies and/or had a take point on or within 330 feet of your property line, you are due nothing.
I also consider that a "chicken" way to run an oil company. You might need professional representation to understand exactly your rights. You might have cause and ability to uni-laterally ratify a lease or unit for pooling purposes and be entitled to a royalty share of production. Sometimes leases and pooling agreements can be construed to be an "offer to pool."
These questions are VERY fact specific and an adviser would need to have the information available to have a full grasp of your particular situation. Something well beyond what was contemplated in the design of this board.
Best
Buddy Cotten
Thank you so very much! I truly appreciate your insight. Yes the perforation is right beyond that and the lease contract was written to exclude us, obviously on purpose. Would you mind telling me the regulation regarding the 330 feet, is this from the RRC? The tract we hold mineral rights to is in the middle of the pooled track and we were cut-out.
Yes, chicken is right, sadly my great grand father held all of the mineral rights and sold them and kept just a piece, and now I guess we will get nothing! Any suggestions.....
It seems so fair and I'm not sure of the fairness/legality?
Dear Ms. Thomas,
Yes the 330' is from the RRC. Closer than that, an exception to Rule 37 (the spacing rule) would need to be obtained. Sadly, one option always available is to protect yourself and drill your own well. On the tract where you have a royalty interest, is it leased to the Operator and included in an unit?
Again, everything is very fact specific.
Buddy Cotten