Thanks, lots of good information that I appreciate greatly.
I thought of something else…
If the NPRI owner has not ratified to pool to date (and a significant amount of time has passed) and the well is not on the 35 acres,
then am I responsible for figuring all this out and notify the oil company they should be paying the 1/8 royalty rate not the reduced rate to me (all the way back to when the well started producing)
or should the oil company be the one who is responsible for keeping track of these kind of situations and be paying the full 1/8 royalty rate until the NPRI owner decides to ratify for pooling their NPRI interest?
When or if that ratification happens from that date forward the oil company would pay the reduced royalty rate to me?
Are we suppose to add language to our division order to make sure we get the reduced rate only if the well is in the 35 acres or the NPRI owner has ratified to pool; otherwise we get the 1/8 royalty rate?
I am beginning to think the NPRI owner has not been found or is really disinterested.
In the situation that you outlined, you would not receive any of the NPRI if the lease or Declaration of Pooling is not ratified. Therefore, that situation increases the oil companies Net Revenue Interest.
You might want to read this blog post and the two preceding posts to get a more comprehensive view or pooling in Texas.
Non-ratified NPRI increases the operator’s NRI? I always thought an NPRI burden was carried by the mineral owner, so their decimal RI will be greater in the absence of a non-drillsite, non-ratified NPRI.
Why would it increase the NRI for the operator, and not the burdened mineral interest owner? Doesn’t make much sense that an operator can steal an NPRI like that at all.
The declaration of pooling is a cross conveyance of interests. The mineral owner has no authority to convey the royalty interest, thus, the NPRI must agree to the pooling in some fashion.
Steal is not the word that I would use. However, some operators NEVER offer the non-drillsite NPRI the opportunity to pool. The fact is, they will even write the Declaration of Pooling Agreement to specifically state that it is not to ever be construed as an offer to pool.
To make it worse, so many of the NPRI owners have no idea that they own some royalty and a well is already drilled and they could share in the revenue of the well. To throw gas on the fire, the NPRI is only allowed to share in production as of the date that the lease or the unit was ratified.
To answer your first question, read the article entitled Pooling in Texas Part 3 (link in the previous post) with a pencil and paper and that will give you the answer.