Hello. My first time with a question here. Inherited family mineral rights in Texas and Ok. We spoke with an oil & gas attorney to clarify legal docs sent to us for a hearing coming up Aug 27th for Pooling, spacing & horizontal drilling in Grady County, OK, Sec 9, 16, 21, 28, Continental Gulfport. He told us that we didn’t have to attend hearing unless we were owners of the wells. Is that true or was he keeping us in the dark cause he represents the owner? He also said hearing was delayed due to a fight between 2 companies wanting drilling rights? Not sure if this is truly the case and if we should attend hearing concerning the pooling order? What are your thoughts?
The cause CD No. 2024-002341
Township 3 North
Range 5 West of the IM, Grady County Ok
Welcome to the forum.
You might get better information if you were to post the case numbers for the Oklahoma Corporation Commission actions.
You can attend any hearing, but doing so would probably not be terribly beneficial. Unless you are well versed in the oil and gas industry, you will probably not understand the proceedings. For most small interest owners the most important thing to pay attention to is the pooling order. Typically it will provide owners with several options involving the bonus/consideration and the amount of the royalty. The larger the bonus, the smaller the royalty. If you don’t actively select on option within the 20-day deadline, then the by law you will be stuck with the option with the highest bonus & lowest royalty. Most savvy owners opt for the highest royalty.
You should consider joining the National Association of Royalty Owners. They have a publication that discusses pooling orders: NARO - National Association of Royalty Owners - Online store product (naro-us.org)
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
I concur with Richard. No point in attending unless you are just curious. All of the paperwork will be sent to you if you have the correct name and address filed at the county courthouse. Make sure that you are on the respondents list for the pooling. If you are not on it because you leased already, then no point in going at all unless you just want to know how they work.
Also, if you have the number of the pooling case, we can look it up. You didn’t add the section and range for Grady, so we need that. Is it Marathon for 9-16-21-28-3N-5W? Case 2024-002336 or pretty close to that? (Sec 21)
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Yes, it is Marathon. I edited my original post to include cause # and Range. Thank you for your help in understanding this.
Thank you for the clarification. I did not know this. The lawyer representing Marathon did not even ask us about our choice of which bonus & royalty percentage or if we were choosing to participate? So much to learn…
Participating as a working interest owner is not for the novice. You need to have the mindset that you could lose your investment in the well, be able to pay for operational insurance, attorney, accountant, etc.
If you are just a regular mineral owner who has a lease or a pooling, then you do not have the extra risk and will just receive your royalties if the well is successful.
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I have been reading comments on hear about a 20 day turn around on responding to a pooling order and/or letter showing the bonus & royalty payouts to choose from but no expiration date? The lawyer for Marathon said we didn’t need to do anything. Then why were we given a choice of payouts or to participate in the drilling?
If you received a letter from an operator that had several options with one being to participate, that is probably to lease or participate. The timeline to lease or participate ends at the end of the pooling that is to come.
If you received letters from an attorney with the Oklahoma Corporation Heading and a case number at the top and an order, that is the pooling options and you only have 20 days in which to answer or you will get the lowest and least optimum royalty chosen for you. The pooling also has an option to participate.
Participating is not for the novice at it involves liability, upfront cash, need for insurance, good accountant, good attorney and a lot of paperwork. Does have some tax advantages though.
0_The Pooling Process in Oklahoma.pdf (340.4 KB)