OCC Pooling Order

[I posted a similar question under McClain County, but then realized my question is not necessarily limited to McClain County.]

The Aug 18, 2022 OCC Pooling Order 727718 for the Red Rocks conventional well (160 ac in the Viola, Bromides and McLish formations in SE/4 Sec 16 5N-4W) has the usual choices for a mineral owner (i.e. participation by sharing in the costs of the well or various levels of royalty with various bonus payments), but it also has an “Option 6.7: CASH CONSIDERATION: $1.00 PER ACRE AND DELIVER NET REVENUE INTEREST LESS THAN 75% AS EXISTING AT THE TIME FORCED POOLING APPLICATION AS FILED: to accept $1.00 per acre and deliver net revenue interest as existing at the time the forced pooling application was filed to the extent the net revenue interest is less than 75% as a fair, reasonable and equitable bonus to be paid unto such owner who elects not to participate in the well by paying such owners proportionate part of the costs thereof… It was the testimony in this cause, certain Respondents own oil and gas leasehold estate interest which has been burdened and the net revenue interest is less than 75%. The overburdened interest is a negative asset to the Applicant. Any Respondents owning oil and gas leasehold estate which have burdens such that the net revenue interest to be delivered is less than 75% shall be entitled to either participate under the provisions of Paragraph 6.1 above (i.e. participate by sharing in the costs), or to elect the provisions of this Paragraph 6.7.”

Can anyone translate this for me?

Typically, this would be a lessee under an oil and gas lease.

Suppose, Oil company secures a lease with a 3/16 royalty. That would mean the oil company would have a .8125 net revenue interest. You get this by taking 1- 3/16 = 13/16. If you put 13/16 in a calculator, it comes out to .8125. Now suppose that Oil company gives an overriding royalty interest to its geologist or president. It gives a 8% orri. That would bring down the net revenue to .7325 If you take .8125 - .08 = .7325. If you did it by percentages, it would be 81.25% - 8% = 73.25 %. this is below .7500 or 75%.

If your lease is burdened down that far, then your only options are to participate int he well by paying your costs, or giving up your rights in this formation.

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