Hoping some experienced O&G attorneys (Wade) can chime in here.
Allocation wells are a way for operators to drill wells across multiple leases without having to formally pool said leases. With this method, mineral and royalty owners are left at the mercy of the operator to use a proper allocation formula. Generally, I haven’t heard too much fuss about allocation wells because most operators are prudent and fair. However, there is one major issue I just came across - how non-drillsite NPRI owners are treated!
When leases are pooled, the non-drillsite NPRI owner has the right to ratify the underlying lease(s). However, when allocation wells are drilled the non-drillsite NPRI owner is essentially ignored from participating in the well production. However, if I’m not mistaken the lease can hold the non-drillsite tract by production for years to come. This means a non-drillsite NPRI owner could not see production for years or even decades, or could even have his/her tract isolated and never drilled while the remainder of the section is drained. This issue seems like it would cause non-drillsite NPRI owners to file lawsuits and push for legislation surrounding allocating wells (I still don’t think there is a current ruling about allocation wells that has been made yet).
So, attorneys, is there any recourse for the non-drillsite NPRI owner on an individual or group basis? Is there anything these owners can do to have legislation passed that treats them similarly to when they are included in a formally pooled unit?