Lease & Forced Pooling in New Mexico

Law & Legal
1

Hey folks,

I own some mineral rights in Eddy County, New Mexico, and was recently surprised to receive a forced pooling notice for two new wells for a section i’m already leased in. Upon inquiring, the operator, Permian Resources informed me that I was already under a pre-existing lease under which I am already receiving payments for 12 other wells within the same section. But they didn’t explain why I was included in the forced pooling notice.

Here’s what adds complexity: the lease document from 2003, which the previous owner signed and under which I’m being compensated, is illegible. The Eddy County clerk has even attached a recorder’s memorandum to the document with the following statement: “Recorders Memorandum - This instrument was not adequate for satisfactory recordation due to illegibility, carbon or photocopy, discolored paper, etc. All blockouts, additions & changes were present at the time of recordation.”

This situation leads me to two critical questions:

  1. Given the issues with the lease document’s legibility and the recorder’s explicit note, is there a legal basis for me to challenge or exit this existing lease?
  2. Why would Permian Resources include me in a forced pooling notice if I am already under a lease? Could this be an oversight, or is there a strategic reason behind their decision?

Any insights or similar experiences would be highly appreciated as I navigate this situation.

2

It could be as simple as Permian Resources drilling to deeper depths. What depths are the wells that are producing now? Are the wells vertical or horizontal? The oil conservation division data website will tell you this when you enter the section, township and range. I’d recommend a New Mexico attorney look into this for you. There are attorneys that advertise on this site under the directories tab. I’d suggest you call one.

Our leases typically hold leases to a certain depth after a well is drilled and producing from a formation. We don’t give carte blanche rights away to lessors in our leases. Many times we are approached by companies wanting to drill horizontally (deeper rights) on existing vertical well leases. And have done so successfully.

3

Ask Permian for a copy of the lease so you can verify terms.

4
  1. In answer to your first question, you should secure NM legal counsel who can give you some answer.
  2. The pooling may be as simple as Permian can’t read the lease either, and they are pooling you just in case there are terms where you are unleased.