Novice doesn’t understand pooling of 18. Needs help understanding please. CDNo. 201902713 Pooling order June 2019 was $4,500 3/16. Then CD No. 202000583 for 18 was $300 for 3/16 May 2020? Don’t get it? And what’s the allocation of bonus among the three sources mean? Thank you in advance for your help.
The pooling order for 201902713 was for three horizons. Mississippian 40%, Woodford 40% and Hunton 20%. 85% of the well was supposed to be in Section 18 and 15% of the well in 19. The orders at that time were competitive with the surrounding area. They did not drill the well in the allotted time.
The new pooling order is for $300 and 3/16ths (and the other options). Lots has happened this year. A tremendous drop in oil prices, low demand, COVID, etc. The same three reservoirs are still possible, but the economics are quite different this year and the prices being offered are lower.
Many of us prefer a higher royalty if we think there will be drilling. The bonus only comes once. The higher royalty is for every well under the pooling order and can bring much better income. Notice, I said “can”.
Here is an explanation of what pooling is. The OCC is giving my search engine some weird notices today about security. They just did an upgrade this week, so a bit wonky.
Thank you for your reply. So, the bonus was paid twice, second time around dropped from $4,500 to $300 because of deteriorating economic conditions. Is this pretty much the same explanation for pooling of 6 6N3W March 2020 for $2,350? Seems bonus is extremely sensitive to economic conditions, price of oil.
6 6N3W pooling CD 202000247.
Yes, I meant the bonus is paid once per pooling order or lease. I have a section that has been pooled four times and I got paid each time. They never did drill a well.
Pooling and leasing offers are definitely tied to the economics of the planned well(s) into the horizon. In general, oily areas tend to get higher prices due to the BTU value of oil and gassy areas tend to get less in offers. In the “old days” when I started, the price of oil vs gas was pretty much tied to the BTU value of each. 1 bbl oil equals about 6000 cubic feet of gas. The ratio of prices today are vastly different.
Thank you again. So when OCC files pooling order, if applicant doesn’t like terms can applicant just decline and “walk away” from the pooled section only to let the pooling order expire and then reapply later at maybe more favorable terms?
…walk away and not pay the bonus.
If the OCC gives a pooling order, then the bonus is supposed to be paid in 35 days or whatever is stated on the order. (Occasionally, I have had to send an operator a certified mail requesting the bonus. They have complied.) The respondents have 20 days in which to respond or they are given the lowest royalty option and the drilling process proceeds. If the operator does not drill the well in the order’s timeframe (usually 180 or 365 days), then the order expires. If they decide to drill in the future, then they have to file a new pooling order.
This year has been an odd one for sure. I have received some poolings that have requested extensions on the drilling timeline due to the COVID situation, lack of rigs, lack of crews, etc.
Here is a 2019 version of the OCCs booklet for owners. I am not sure if they have published a new one for 2020.
0_Basic Information for OK Mineral Owner June 2019.pdf (4.5 MB)
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Thank you for your replies…all very helpful, and the link to the booklet.
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