Hello. I am new to the world of oil and mineral leases. My father passed away leaving at least one lease which I have received a request to extend and amend to include pooling. Is this a benefit? If so, is there an approach to determining the value of the pooling and/or extension? In general, is there a recommended source to educate oneself on oil and mineral leases?
Appreciate insights, etc.
L Funkhouser
Laurie,
Your question is a good one, and their is no simple answer. Generally speaking pooling should be avoided when dealing with traditional vertical wells, unless the prospect being developed is very near property/lease lines with different mineral owners involved.
In the new world of horizontal wells with very long offsets it will normally be necessary for neighbors to pool interests unless they control very large tracts of land. Say anything less than a section. The allocation of pooled interests is theoretically based on the percentage of the combined acreage owned by each individual mineral contribution. But it isn't always so clear cut.
The TCU Energy Institute offers three day seminars around the state specifically to educate mineral owners on how to deal with these issues. They are a little pricy but can be worth the investment. A more reasonable approach may be to hire a competent Oil & Gas attorney or independent landman in Midland or Abilene to consult with on the matter. The pooling and extension agreement you make now is likely going to be a one time opportunity for you to create the best deal for yourself and you will have to live with the results for many years if production is established.
Thank you for your response. There is a lot to learn and appreciate your taking the time to respond. Thank you.
Joe H Smith said:
Laurie,
Your question is a good one, and their is no simple answer. Generally speaking pooling should be avoided when dealing with traditional vertical wells, unless the prospect being developed is very near property/lease lines with different mineral owners involved.
In the new world of horizontal wells with very long offsets it will normally be necessary for neighbors to pool interests unless they control very large tracts of land. Say anything less than a section. The allocation of pooled interests is theoretically based on the percentage of the combined acreage owned by each individual mineral contribution. But it isn't always so clear cut.
The TCU Energy Institute offers three day seminars around the state specifically to educate mineral owners on how to deal with these issues. They are a little pricy but can be worth the investment. A more reasonable approach may be to hire a competent Oil & Gas attorney or independent landman in Midland or Abilene to consult with on the matter. The pooling and extension agreement you make now is likely going to be a one time opportunity for you to create the best deal for yourself and you will have to live with the results for many years if production is established.