Am I being unreasonable regarding contractual language concerning POOLING in an oil and gas lease agreement which reads:
Pooling: Lessee shall have no right to pool or unitize this Lease hereunder without the prior written consent of Lessor unless all of this lease is included in any such pool or unit.
Background info: Several family members with contiguous tracts are in the process of being leased and without this requirement (all or nothing) it might leave some family members not being pooled, thus not receiving royalties in the event Lessee decides to drill.
As you can appreciate, this would cause some hard feelings among family members. Anybody got a better way of wording this or a solution? Thanks.
The two questions you pose are in conflict with one another. If you want all the family members to be part of the well potentially being drilled, you would want to give the Lessee the right to pool your interest with the others.
Individually answering your questions:
(a) Yes, that is unreasonable. Without the ability to pool acreage together, the Lessee (E&P Company) will likely not be able to drill a well - that is, unless you own more than 640 acres of mineral rights that are contiguous. Therefore, the lease is kind of worthless. If you are in Oklahoma, they will just pool you at the OCC rather than taking this lease with you.
(b) The answer to your second question depends on where you are (Oklahoma, Texas, Kansas) and if all of your family members are in the same tract of land as you. Assuming you are all in the same tract in Oklahoma, all of your leases should be pooled together for the purposes of drilling a well and you likely have nothing to worry about.
Hi Robert:
We are in Texas; 300 acres; 3 separate lease agreements. What we're trying to avoid is IF the Lessee (E&P) attempts to leave one of our leases out to pool it with neighboring lands since each lease is owned by different relatives. When you mention same tract of land do you mean section (640 acres) or same survey?
Robert A. Hefner V said:
The two questions you pose are in conflict with one another. If you want all the family members to be part of the well potentially being drilled, you would want to give the Lessee the right to pool your interest with the others.
Individually answering your questions:
(a) Yes, that is unreasonable. Without the ability to pool acreage together, the Lessee (E&P Company) will likely not be able to drill a well - that is, unless you own more than 640 acres of mineral rights that are contiguous. Therefore, the lease is kind of worthless. If you are in Oklahoma, they will just pool you at the OCC rather than taking this lease with you.
(b) The answer to your second question depends on where you are (Oklahoma, Texas, Kansas) and if all of your family members are in the same tract of land as you. Assuming you are all in the same tract in Oklahoma, all of your leases should be pooled together for the purposes of drilling a well and you likely have nothing to worry about.
Okay. Texas works differently than Oklahoma as there is no "forced" pooling. In Texas it is possible to cut out Lessor's when creating a spacing unit.
However, I would bet that you all own within the same tract. If that is the case, they can't cut any of you out of the drilling unit. 300 acres is somewhat small anyway, so I don't think you'll have an issue. Most of these wells being drilled today have long laterals and even under conventional Texas field rules, they will likely hold more than 400 acres.
At the very least, you can inquire with the leasing agent you are speaking with the Lessee's intentions for drilling a well on your land and what kind of acreage sizes they plan on making into drilling units.
Hope this helps.
And the landman will tell you anything he thinks you want to hear as long as it isn't ending up in the lease and the operator will not be bound by it. Get it in writing.