Why would oil company pool at 1/8 after we clearly signed an option to lease at 3/16?

My Sisters and I are new to minerals, oil leases, etc., as we lost our father and inherited several sections he owned in Seminole county. I have a couple of questions for those who are more knowledgable. First, is New Dominion a reputable company? Second, do oil companies ever, and is it legal for them to provide an OGL “after” the Pooling Order has been filed? Three of 5 of us girls were sent an Option to Lease Oct. 2012, and we checked option 2, at 3/16, and have our copies on file. The oil company decided to “Pool” it at 1/8… We never received a Lease, yet they want us to sign a RDO. We told them we have not signed the lease yet & they said “No need” it has been pooled at 1/8. The other 5-6 sections we have signed leases on were at 3/16. Please shed some light on what & why? This well supposedly hit good, as the money has been suspended until we get our quiet title completed, which should not be an issue as we have all documents needed. They said in smaller producing wells, they would not suspend, but this one involved more money. But, for now just sign the Division Order. They sent a Division Order along with a Relief Sought: Well Density letter on this horizontal well. Any advice would be greatly appreciated. THANK YOU!

Did New Dominion ever pay you the bonus money? I'm not totally up on Ok rules but I believe they were supposed to have paid the bonus by a certain time if you were pooled. Did you not receive any notices from the Corporation Commission? Possibly offering a selection of bonus / royalty? In my experience, doing nothing in oil and gas is usually the worst thing you can do. If you had received a pooling notice and you had not signed a lease, I would have made an election anyway. The lease, if it were ever executed, returned, accepted and recorded would override the pooling election, I believe. If you made no attempt to resolve issues, you were probably pooled by the state and assigned the highest bonus and lowest royalty as a matter of course. I believe the state does this to benefit the operator and uses the example of wells that were dry or never produced much as reasoning to select for you the highest bonus and lowest royalty (1/8) even though the difference in bonus may only be $50 per acre more than the $XXX/ 3/16 royalty which would be 50% more money per month. New Dominion may not have planned this but I will guarantee you that they will not be looking this gift horse in the mouth. The sole business of a lessee/operator is to make money, do not expect them to volunteer to fix this.

My best advice, if this situation is retrievable at all, is to collect as many facts as you can and do not delay. I would not return the division order or cash checks if you intend to try and right this situation. There may be nothing you can do at this point. This shows that a word, letter or piece of paperwork at the right time is important. Things in oil and gas do not get better if you wait. Best to find out as soon as possible if you can right this situation and I would give low odds of it turning out favorably if it isn't finished in 3 to 6 months. Good luck.

Timing is everything. If you signed the 3/16th lease option before the pooling Order was finalized then you are entitled to a 3/16th. Otherwise, you are probably stuck.

Whoever is doing your Quiet Title Suit can probably help you on this issue as well.

Send me a private message and we can discuss this further.

Matthew H. McBee