I have also received 3 plans from continental and not sure whether to sign the ratification.
I only received the Proposal not anything from OCC, and the proposal only states āan estimated 9-17 wellsā Should I request more information? From what I have read, they can do a Force Pool even if they donāt get the signatures, is that correct?
A unitization is different than a Forced Pooling. Are you already leased? The Force Pooling is essentially a leasing by court proceeding. The spacing is different. They will have to file a spacing through the OCC. They may file the unionization as a spacing case.
Thank you for that clarification 
I was confused on the force pooling. Yes my mother signed a 3 year lease with Echo back in August 2017 and from what iāve read Continental has a lot of Echoās property now.
Kimberly,I have the same stuff from Continentalā¦the question I had was they are asking us to ratify, confirm, adopt and approve the Plan of Unitization and agree to be bound by all terms. I have yet to see the plan except that they say they are going to drill 9-17 or so wells on each 4 section plan. But whatās the plan. They havenāt approached the OCC until they get their 63% of people that signed but I am not sure whether to sign or not either. I asked Martha Barnes about this recently and she said not to sign unless have to but I agree with the more people and more space the less we get. But she did say the they have to pay whether signing it or not. Martha, I am still not clear. on this either and have not signed. I have three sections in one of the 4 section plans so stand to make 75% on that one and have two of the other one and and on on the other one. I have a very small interest so wondering if better not to ratify a plan and just make them pay me for what they get out of what i have or ratifying something that would give me a an even smaller amount. Now that I see you are getting more questions on this what is the way to go? Iām stumped.
Martha, how can I contact you off lineā¦just a few questions on how to proceed with this. I am leased on three sections on one plan, two on another and one on the other so basically they canāt pool me, right? They will drill around my existing wells is what they said but still donāt know how signing or not signing makes a difference. Thanks.
This same question came up at the National NARO meeting. I will try to explain without waving my arms like I did there.
This is a plan of unitization, not a pooling. In the āoldā days, they would drill wells on smaller spacing , prove up the reservoir and then over time unitization was mostly for secondary recovery techniques. Many operators in the same reservoir would join together to make a unit so they could waterflood or gas flood and get more recovery. In those cases, the reservoir had been tested with adequate spacing for every well, folks had gotten a good deal of their royalties already but they would probably make additional money by the secondary recovery techniques. My grandfather signed many of those units and we still benefit 50 years later.
In this case, they are not drilling the wells first which bothers me as a geologist. They are planning for Woodford horizontal wells under a shallow field that looks highly faulted. I do not have the data to see if the Woodford is caught up in the faults or relatively unscathed underneath. It is the source rock for those shallow fields (many of whom are in old secondary recovery units.)
If the Woodford is fine and not messed up by faults, then the units may be fine in the long run IF THEY DRILL THE ADDITIONAL WELLS. But what bothers me is that they can hold all four sections with one well and never come back and drill more. Then anyone who is in that unit will have a very small decimal and not much to show for it. And if folks have acres in one of those four sections that is not drilled, they are tied up until that first well stops production in a few decades. No one else can come back in and drill the non-drilled sections. From CLR point of view it is great, but as a mineral owner, I prefer that they only have units that actually cover the first boreholes planned. I would rather see two 1280 units parallel to each other and at least get two wells instead of a huge 2560 acre unit.
Continental certainly has the skill and expertise to drill all those wells, so if the unit is ratified by enough folks, and they proceed as they say they will, then all may turn out okay. If it were me, I would want a complete copy of the plan of unitization before signing anything. Recent drilling has indicated that it is better to drill those child wells right after the parent well, so that might lean them toward drilling the extra wells. Just my opinionā¦others can pipe up.
They have units this big in North Dakota. Where I am a tiny mineral owner and they drill all the wells, then I am happy. If I am a tiny mineral owner and they donāt drill all the wells, then I get very little. I think this is a fairly new attempt to get larger units in OK.
On the pooling question, if you are leased at the Woodford depth, then you will not be pooled. If you were pooled on the shallow reservoirs, but not the Woodford, then you need to lease again or be pooled for the deeper horizon.
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This feels like its all about grabbing proved reserves for the booksā¦
Ahhh, you are perceptive. And tying up a whole bunch of land for a long time.
M_Barnesā¦I recently received a notice from OCC #201904973 for a gas well in section 36 1S 3W, this section is also involved in one of the unitizations that they are trying to get passed. Forgive me if this is a dumb question, but is it possible to drill this gas well and also have a multi-unit Horizontal well?
201904973 is actually the spacing order that is required before they can drill the new well(s). They must space each of the reservoirs at 640 to cover the whole section. You will also get the requested cases that will approve the Horizontal wells, the Location Exception (which moves the location from the center of the section). Those have to be approved before a permit for the single section or multi section well can be issued. The Pooling usually comes last, but sometimes things get out of order.
So you are saying this goes along with the Unitization they are trying to establish?
Yes, they have to follow a certain order of requirements before they can drill. I cannot see the Unitization application on the OCC yet. Do you have a number at the top of the document? They may be trying to get enough signatures before they go to the commission. The current cases are what they regularly have to do just to drill.
No I do not have anything from the OCC on the Unitization. Thank you for the explanation
Martha, they were letters sent from Continental so no cause #s yetā¦that was my concern we donāt know what the plan is until they go to OCC with request of all this stuff. So, should I sign or not sign the ratification and will I still get paid regardless if drilling on my mineral rights? A lot of mine was leased to Echo so guess Continemtal owns it now if they bought out Echo so how does that change things? Also have wells on some of the sections that are leased to other people or old and HBP so they will have to drill around them if drill 9 to 17 wells as they say theyāre going to do. So, you brought up an excellent point about drilling in one section could hold the other 3 sections by production soā¦will that happen if we sign the ratification of the plan and/or if we donāt sign the ratification they canāt hold the other 3 sections? Or they canāt hold it by production unless we give them permission and dont sign the ratification? thatās where my confusion is, what happens if we dont sign?
Hard to answer all the questions with certainty. There are hundreds of owners in each of those four sections, so many will sign blindly, some will ignore the paperwork or cannot be found, some will not sign. If enough donāt sign, then they will probably go ahead and try the 1280 units which are more common and will hold the acreage that a two section well will hold. Your individual conclusion depends on hundreds of other folks.
The shallow production is not really an issue as the new horizontal wells will drill below them and the surface locations will be either at the north end or the south end of the two sections or four sections. Very likely to be outside the sections so that the turn for horizontal is not in the perforated sections.
If you donāt sign, you hope that there are enough others that donāt. It is a percentage thing. If they get enough yes votes, they will go to the commission. If the commission says yes, then the unit will exist in its large four section form and drilling of the first well will most likely commence and you hope that they drill all of the rest in a timely and wise fashion.
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Yikes, that is a hard decision to make with so many ifs. I hesitate to sign but donāt want to be pooled either. And sure donāt want to be HBP on four sections with one well on itā¦going to call Continental and see if I can get clarification on what happens if we donāt sign because need to know spacing and plan before signing. Do they really expect people to just sign away their rights without reading the plan? Or is it legal for them to do thisā¦seems we are not given enough info to sign but waiting on OCC info to decide then makes us late for answering and we can be pooled?
Pooling and the unitization are two different things. Pooling is just fine in some circumstances. Pooling is a like a forced lease when not everyone signs a lease. If you have an old lease with no depth clause, then you are already held. Some folks have shallow pooling on the up section reservoirs. They are open to lease again or be force pooled. The unitization is a different beast and pertains to the unit acreage bundled together for the wells. Good luck getting any answers out of Continental.
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Yes, Matha, itās hard to get through to anybody these days. Thanks for your helpā¦if anyone else has info on these Continental unit plans please chime inā¦
Happy to help as we also own minerals in Carter Co. and are available to help navigate.