I own a one-sixteenth mineral interest in a 147 acre tract in a north central Texas county. A large producer/operator has repeatedly contacted me wanting to take a lease. I have made it very clear I prefer to participate in the well to the extent of my mineral interest in the final unit for any and all wells drilled. I have even asked the landman to send an AFE and operating agreement for my consideration but the landman says the operator will not have any partners in their wells. From what I can tell from their drilling permit request(s) the lands in which I own will be in their proposed unit(s) but they will not perforate the well bore within 330' of the tract in which I own thereby preventing me from participating in their well(s).
I'm thinking I might have a good MIPA case but need to visit with a professional to discuss the particulars or gain guidance on how to counter the operator's actions.
Does anyone on the Forum have that expertise or can anyone recommend someone who does?
Yes,
It is insanely expensive. The oil company is under no obligation whatsoever to bring in a partner if they do not want to, other than common law joint ownership. You cannot be forced pooled and the MIPA itself will drag on and on. If you are successful in MIPA proceedings, then you can have an interest from the date the order is effective, but not before.
The oil company has several great arguments.
First, they are drilling at a legal location and have the requisite stand off distance. That is a legal location.
They have tried to work with you for a lease and you kept saying no. That is required under MIPA, to make a fair and reasonable offer.
You have the right to drill your own well to protect yourself from drainage. That is the common law remedy.
You would have a very weak MIPA action. The MIPA action would not allow you to participate in any other wells in the unit. Only the one that you are claiming drainage on.
If you were leased, and the tract was excluded and the unit gerrymandered to exclude your lease, then you have an action for bad faith pooling. You cannot make that claim because your interest will not be pooled. There is no lease to create a pooling transaction.
Only about 150 MIPA actions have been granted since the Inception of the Mineral Interest Pooling Act, Section 102, Natural Resources Code, 1961.
Best result would be to negotiate a good lease for yourself.
Buddy Cotten
Wouldn't a fair and resonable offer from me be to participate at my own cost, risk, and expense? When you say insanely expensive, how so? More than $50,000?
yes. likely closer to 100k. and you have to wait for drainage that you can prove. geologists, reservoir engineers and their hourly rates you eat 100%. The fair and reasonable offer comes from them, for you to lease. Not from you. Since flush production occurs early, by the time you could force yourself into a well, they would likely let you and try to over operate you to death. Then, you are still only in one well. Not any that could be drilled in the unit.
Buddy
Mr. Bradford
Buddy has given you good advise, you do not want to be partners with the big boys. You will be nickeled and dimed to death
Charles Cunningham