I have been sent a form for Ratification of Designation of Pooled Unit for royalty interests that I own. It is for a 654.287 acre pooled unit in Texas. This is the second time that I have received such an agreement and in both cases it has been from 3rd parties. I tried to call the operator to make sure they are in agreement with this change but they never call me back.
Is such a change beneficial or not to me as a royalty owner? If not, do I need to agree to the pool unit?
A good rule of thumb is to NEVER sign a ratification of a lease or a pooling agreement until you have examined the actual lease or pooling agreement, understand exactly what you are signing, and until it has been reviewed by a competent oil and gas attorney familiar with royalty owner’s issues.
It seems from your question that you are not an Executive Rights holder; you seem to be an NPRI (Non-participating royalty owner). It is very important as an NPRI to know exactly where your royalty interest lies in the pooled unit. If you are in the DRILLSITE TRACT, that is, the tract of the drilling unit where the wellbore is actually drilled, you have special rights granted by the state of Texas not to pool if you do not want to. If you do not ratify pooling, then you will be paid according to your basic royalty percentage not diluted by pooling. This is because no one can pool for you on your behalf, and it is up to you whether you get diluted by pooling or not.
However, if your royalty interest lies in some other tract of the drilling unit, you probably want to pool. In this case, if you do not sign a pooling agreement, then you will not share in the proceeds of the well until much later in the life of the well, if at all. Whether or not to pool, as you can see, is not a cut-and-dried matter. It all depends. It all depends on your interest. That is why no one else can answer the question accurately for you.
The rules on pooling that apply to traditional vertical wells generally apply the same way to horizontal wells. You can obtain a plat of the planned well by looking up the drilling permit for the well at the Railroad Commission’s website. The plat will be attached as one of the supporting documents. The plat will show the plan for the well, where the wellbore is located, what the tracts are, etc.
You can do a lot of your own research online regarding the issue of pooling by searching for associated terms of Texas, pooling, and NPRI’s. As far as receiving such a request from third parties, it could well be that the oil company sends an independent or contracted landman to contact you about this matter, or someone with the company themselves might contact you. It could be either way. I wouldn’t let that throw you. If you need a copy of the lease covering the well, the oil company will generally furnish you with a copy if you have an interest in the well. Contact the company’s Division Order Analyst.
Good luck!
Hey does this also apply on Oklahoma and I want to be a participant in the Wells how do I go about this
No it does not. Tho participate as a working interest owner you must have unleased minerals or leasehold.
Unless you are in the oil & gas business, I would be very reluctant to suggest that you participate in a well in Oklahoma (or any well).
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