My siblings and I hold mineral rights in Caddo County, OK. We recently received a document that is an application by BCE-MACH LLC to establish 640-Acre horizontal drilling and spacing units. What does this mean? Do we need to do anything? From what I’ve read this is the step before “pooling” (whatever the heck that is) and then we could get lease/buy offers (I have already gotten some). I just want to make sure this doesn’t require action on our parts.
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You do not need to do anything at this point. This is the first step in a line of steps that need to go through the corporation commission before a well can be drilled.
The general order is spacing for a formation or formations of interest, then request for a horizontal well, either single section or multi-section, then location exception if the well is to be drilled anywhere not in the center of the spacing unit, then pooling if all of the acreage is not leased. If you already have a lease on the section that goes to the center of the earth with active production, you will not get a pooling notice. If you do not, then you may get requests to lease during this early time frame. Pooling is the last step. If you have never leased before, it is wise to get a good oil and gas attorney to look at the draft lease offers as they are rarely in the mineral owner’s favor. If you cannot get a good lease, then you can wait for pooling as it has it own advantages. If you do go to pooling, you only have 20 calendar days in which to answer the pooling. Most of us want the highest royalty as funds from a successful well or wells at the higher royalty will far outweigh a one time bonus for the lower royalty.
0_Royalty-Owners-Booklet-112020.pdf (6.8 MB)
0_The Pooling Process in Oklahoma.pdf (340.4 KB)
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Thank you for the pooling process info, along with all your expertise in so many areas related to minerals!! After reading the pooling document, I’m still trying to understand if a pooling application is required by statute in Oklahoma, or just “industry standard”?
I wonder if others here have had similar situations to ours, where I, and others, own approximately 5% of the minerals in a 640 acre spacing unit in Jefferson County. An oil company/operator thought they had leased all the minerals and drilled a horizontal well, although it didn’t produce at the projected levels.
Shortly after production began, the operator was notified they had failed to lease all the minerals, and due to the lower than anticipated production, refused to lease us, and said a pooling application to cover our minerals wasn’t required. Rather, they unilaterally converted all of us to “carried working interest owners”, which means, we were never provided the opportunity to to participate in the well, or receive a royalty percentage for our minerals. Based on production levels, we will never see a penny for any of our 5% of the production, which they continue to receive payment for! If the well was a big producer, I bet the operator would have been more than happy to lease or pool us!
Any guidance/advice from others would be greatly appreciated!! It’s hard to justify legal fees to fight an oil company, when you’re not receiving any revenue from your minerals!!
I will let one of the legal eagles answer this one!
Thanks, and hopefully they’ll see it…and respond! Is this the right category/section, or should I post it in a different one?
In general, it is better to post your questions in the state, county so that the forum stays tidy. If this is not a BCE-MACH question, then copy and paste it over in Jefferson County.