So I see this term and in general can grasp it but what are all the nuances when talking Oil & Mineral Pooling? At best I assume that energy companies are bringing together many smaller mineral owners and forming a pool and anything produced is shared. If you are being proposed or solicited by landsmen representing energy companies and they are talking about leasing and pooling your interest what exactly does that mean?
Is this common or more common today? Is this what most are doing when leasing? Any commentary is welcome! Thnx JT
My brother and i are in a pool in Reeves county, we have 50 acres out of a pool of around 800, pooling is usually contiguous land areas. Basically, from what i have seen, pooling increases your chances of getting a well. Greater chance of a well on 800 acres than, say, 40. Then they apportion royalties based on the aggregate amount of production from the ENTIRE pool, and your royalty amount is pro-rated based on the percentage of the pool land you have and what your royalties are. So while my bro and i have 25% royalties on our 50 acres, in the pool of 800 it becomes a 1% royalty but of a much larger area and production amount. I am cool with it, and it is good especially if your land is in a few pieces, it guarantees you get a piece of the pie. Imagine if you have 20 acres, the guy next to you have 100, and he gets the well and all the royalties and you are right next door and get nothing? And with lateral wells this also negates any issues with someone who has a well going under their land but no well heads on theirs. Anyhow, I think it is pretty fair, as fair as it can be, and it sure has been beneficial to me and my brother. Granted our well is pretty new. The Sievers State 2-1, 2H by Anadarko. Our land is in Section 1, Block 2 H & GN RR Reeves County
The downside is that all the operator might be able to hold a large amount of acreage with minimal continuing operations. That prevents re-leasing and collected additional bonus money. The economics for the mineral owner can be such that deferring drilling and production and collecting lease bonuses every three years can have a better net present value.