Or, if a lease has been pooled with some neighboring leases, can that pool be collected into a larger pool?
Example: you have a lease from 1979 that states it expires 1 year after production stops. You have a document showing that lease has been pooled with three neighboring properties/leases, so by the terms of the lease, it is still in effect during production in the pooled area. The pooling document does not state any expiration terms, but there has been no production on any of the leased/pooled areas for 10 years. Is it possible for that lease or pool to be part of a larger pool, and therefore the lease still be extended by production on some part of the larger pool?
Second question: Landowners A, B, and C have neighboring properties. All three landowners' properties have leases that were pooled together in 1979. A company wants to drill on Landowner A's property. Landowner A was told they were being held to that lease and pooling document, Landowner B was told they needed to sign a lease, and Landowner C was not contacted at all. Wouldn't all 3 landowners be held to the 1979 pooling agreement?
Amber, the proper answer is you should have an O&G attorney review this material. What you described requires a careful review of all the documents. Though in general (perhaps not your case) pooling is done in one of two ways; 1. pooling acres to create a drilling unit. 2. pooling acres where production exists. In each case pooling may involve all of that acreage, or may involve only portions of it, or may involve only certain geological strata (a specific formation but not all formations). In other words there is a wide variety of possibilities in the situation you described.
Your first questions; Yes, acres can be pooled. Yes, changes can later be made to acres which are pooled (acres removed, or acres pooled with larger entity). If you're pooled (or unitized) the terms of that agreement can override the terms within your original lease. So your lease and any subsequent pooling documentation would need to be properly reviewed. Though "in general" I'd suspect your 1979 lease terminated if there has been no production within the pooled unit for a decade. However that's only a guess and may be wrong.
Your second question; "In general" I'd expect A, B, and C would all be in the same boat if their minerals were all part of the same pool. However, many things might affect this (different terms in their original leases, or some subsequent ratifications signed by some though not all, drilling into strata not covered with original pooling...). It could also be a case where the producer hopes to improperly exclude "C" from the new activity, or possibly they simply haven't found them yet. As you can see someone needs to carefully research this.
Bottom line, if you are "A, B, or C", be very careful about signing anything until you know exactly where you stand legally (re-read my first sentence). Hope this makes sense. Good luck.
Amber, I think Eastern MT did a good job of describing the situation. I would like to add one thing and that if the pooling clause is the lessees pooling clause, they probably have unlimited pooling rights and can do whatever they want. Reading what the lease says may not be enlightening. If you read the clause and see from time to time or as needed or something like that, it's probably unlimited for the life of the lease. If you get a chance to lease again it might pay to give more attention to this clause. I wouldn't want the lessee and by cross conveyance the operator to pool me into a spacing 5 times the size that the well can drain, diluting my royalty, or decide later that I really shouldn't be in the pool and collecting royalty, if I am.
Thanks, folks. Unfortunately finding an O&G attorney is turning into a needle-in-a-haystack. Our area doesn't seem to have many, and the only one that's actually returned my calls or emails wants a $500 retainer before he'll even look at any documents. With the cost of hay skyrocketing in our area, I just can't do that until spring. The only local title company has an attorney looking into it, but...it's looking like I'll just have to hope they don't proceed with the drilling until spring :). Thanks again for the info!
Amber, finding a good O&G attorney, who is available, can be a trick no matter where you live. If you are in the area of the minerals, go to the courthouse and copy any and all recorded documents regarding your property. Having these documents in hand will be important when the attorney reviews it, and it should lower the potential costs too. Further, regardless of if the company decides to proceed, don't sign anything until you know where you stand. If asked to do so, just write them back and inform them you're having their material reviewed.
Hello! Yes, I've gotten all of the documents that I could find in the courthouse; the ladies in the records office were more than a little perturbed at me that day :). The company tells me they own the mineral rights via a pool, but they have not been able to provide me with any clear documentation and what I found at the courthouse doesn't really collaborate their claim. Chances are I've just not found the right document yet; I plan on taking another trip up there at the end of this week. Thanks again!
Glad you've done your homework and plan on another careful search. The oil company may be correct. Though when they contact you, keep asking them to provide their documentation that proves your minerals are tied up in their pooled unit. They need to prove your interest was in the pool both initially, and is still currently held by it. If they can't produce the documentation they can't hold you to anything. Again, just proceed carefully and good luck.
Also, some pooling clauses say that if your pool is inluded in another pool, that you are bound by that second pooling agreement.
I could understand that; but this particular lease agreement doesn't say anything of the sort and the oil company seems to be either unwilling or unable to provide documentation or direction. The oil company has stopped communicating, and the title company & their attorney have looked at all the documents that I and they could find and don't believe the oil company owns the rights; so they advise to just sit back and see what the oil company's next move is. So whether I like it or not, I guess I'm at a standstill :(
Generally speaking, yes, a lease can constitute parts of more than one proration unit (pool). However, if there is some clause in the underlying lease that would prohibit it, then no.
I don't really understand the part about a pool being part of a larger pool, I would answer it by saying that a pool can be combined with other pools to create a unit, typically in order to recover more production than would be possible if each pool operated separately (called "secondary recovery").
In your scenario, you state that A, B, and C "have leases that were pooled together in 1979," but then say that B was told to lease and C was never contacted at all. That makes no sense to me unless the leases underlying that pool expired on their own terms and A, B, and C were contacted for NEW leases.