ND Pooling Inside a Drill Spacing?

I received an interesting / perplexing letter from an operator where they want my brother and myself as unleased interests to enter into a pooling agreement inside a 4 section spacing the ND Industrial Commission has already granted the operator. Both 2 section spacings are already HBP with at least 2 wells on each 2 section spacing.

There is going to be a new well drilled just off centerline between the two original 2 section spacings. I'm certain that we will get paid whether we execute the pooling agreement or not as the spacing by the industrial commission renders it moot, leaving only a few minor clauses such as agreeing to be bound by affirmative action regulations. I'm not going to append my name to a number of documents that appear to not do anything.

I'm left wondering if the operator's office staff just have too much time on their hands? I just don't see a good reason for the voluntary pooling at this time. I thought I would invite comments. Thanks in advance.


I know that your family has some very well located minerals in ND and suspect from your postings that you have used the non-consent provisions to maximize your long term income potential. While you have large acreage under control, there are hundreds of small parcels that the operators have yet to deal with. I agree that now is a good time to clean thing up. I see it happening all over the place.

ased on long time family surface and mineral ownership of clients in the area, here are a few guesses:

1. Perhaps the operator has discovered that you and your brother have inherited more than you know about directly and they want to clean up some outstanding DO title search acreage. I discovered the one of my clients with minerals in Williams and Mountrail counties with interests in 10 separate parcels gained that interest directly from grandmother and mother in 3 documents, but also from a great aunt she didn't know, and another relative that had married into the grandparents's extended family. The extended interests never applied to the entire 10 parcels. You know better than I how to force the information from the operator's legal research documents.

2. Take a look at the minutes from the commission hearings on the 4 section unit as well as the order itself. There may be a provision that requires the operator to confirm the approval of as many owners as possible. 2560 acre spacing in controversial in that unleased or force pooled owners may forced into "field rules" for the benefit of the operators and not necessarily the benefit of the small interest owners; especially those that can vote.

3. In the long run, as many as 8 separate zones could be exploited within a 4 section unit. We know the oil is there but don't yet have the economically proven technology to extract it. Certainly the operators would like to decimate the administrative costs of royalty owner maintenance. One way is to convert the well bore interest to a field interest. Hess, for one did this back in the 1980's in the Madison so there is precedent in the State.

4. As the Bakken and Three Forks developments continue more towards a "mining/manufacturing" status and away from the high risk oil and gas exploration and proaction of small deposits, deals for the royalty owner to stabilize revenue will be available.

What you are experiencing as a major owner/participant in the area, may become good for everyone once the operators understand that "fairness" is a requirement.

Please let us know what happens.

Gary L Hutchinson

Minerals Managment

Thank you Gary. Field rules in the future did come to mind as I pondered the purpose. I realize that pooling is often necessary but I believe it should be confined to the needs of the moment and not carte blanche. I hope they are not too disappointed that I am not going to execute the agreement.