I have received a lease to be amended for pooling in Reagan County. It dates back to 1950's. The royalty interest being paid in 1/8. Can I have this changed to 1/4 when I sign the pooling amendment?
You can negotiate lease changes. Likely that lessee will argue that there are overriding royalties granted against your lease and minerals that already total to 25% and so they cannot raise your royalty. That does not mean you have to agree to pool. Your power depends on how much acreage you control. Are you the only lessor on a large acreage or can you get the other mineral owners together? Is your tract essential to the unit? Is this for water flood of shallow wells or new horizontal well? Is lease about to expire due to failure of existing well production, so you might want to wait it out. If not, then ask how many working interests (lessees) own your lease and if there are different owners of different depths. Ask for drilling title opinion. After 65 years lease ownership has probably been subdivided. All lessees of any unitized formation need to sign any lease amendment. Ask for lease amendment for cost-free royalties in addition to any increase in royalty rate. Be sure to have an oil and gas attorney review the language as a lot of seemingly cost-free language is ineffective. Review the pooling agreement carefully before signing anything. Is it only for a specified formation or limited depth? How many gross acres? Can acreage or depths be changed without your approval (this is a common section these days and not to your benefit). You should never sign a binding document without a full understanding of its terms and the circumstances. Others may post more things for you to consider. Do not let the operator pressure you into a fast response and signature. Good luck.
They will be drilling oil wells that are 7500 ft laterals. The pooling amendment is for any depth. There are other wells in the area that are producing. These supposedly will not be effected. This may not happen until 2017.
Given that what you are considering signing could significantly impact any future revenues you could be due from potentially very large income streams, why not hire an attorney who knows oil and gas law to help iron out the details?
Since the terms of your 1950’s lease are almost certainly more favorable to the lessee than to you, this is one of the few opportunities you may have for another bite at the apple. All of the points raised by the commenter above are valid and timely, and you should absolutely seek legal advice to help draft and negotiate changes. You probably have no Pugh clause and you want to be prescriptive in any grant of pooling authority. Under certain circumstances you may be in a better position if you refuse to amend, which would force a lessee drilling a lateral to pay on a basis other than acreage. A good lawyer can walk you through all of these options. Good luck!