PoolingCost DeterminationChange of Operator
Eric R. King
Week FourSeptember 15, 2011
The Forced Pooling Statute
• In order to avoid the drilling of unnecessary wells
• To protect correlative rights
• Prevent economic waste
May require owners to pool and develop the lands in the spacing unit as a unit
OAC 165:5-7-7: Pooling
OAC 165:5-15-3:Pooling Orders
May your negotiations as a Landman on values be as sharp
as this couple’s math.
(g) Notice of hearing for a redetermination of well costs shall be as provided in the initial application. Such request shall be in the form of a motion filed under the original CD number of the pooling.
Cost Determination “Motion”
OAC 165:5-7-7(g)
Pooling Cases
• Pooling cases summarized– Be sure and review case number 52 and
53 involving Harding and Shelton.
• Since 1960 the Commission has ruled that participants may share in force-pooled acreage
• The Right to Share is an equitable right• Randy Specht the Commission Appellate
Referee has suggested the time is ripe to make this issue the subject of a rulemaking. See alsoMichael L. Decker’s article, In Search of a Visage of Truth – Rulemaking or Adjudication at the Corporation Commission, 60 OBAJ 2655 (1989)
Participant’s Right to Share in Force Pooled Acreage
Strategy in Enforcing Such Right
Unusual Overburdened Transactions
1. 1/4 royalty
2. Bonus of $500 per acre to be paid within 2 years of execution of lease
3. 100% back-in after payout
4. Request for statutory bond allegedly available under 52 O.S. Sec 87.1 (allegedly allows for deduction of completed well costs from production – but makes no provision for payment in the event of a dry hole)
Unusual Overburdened Transactions
1. 40% burdened leases delivering a 60% NRI
We are fortunate to have captured the reaction of a news anchor regarding the acceptance of the
unusual overburdened transactions
Overburdened Transactions
The Treatment of Excessively Burdened
Working Interests Under a Pooling Application
See “A Primer on Forced Pooling of
Oil and Gas interests in Oklahoma”
by Charles Nesbitt, 50 O.B.J. 648 (1978)
A clip that explains the hierarchy at the Corporation Commission
Commissioners Mineral Owners and Oil Companies
The Lawyers
Change of Operator 165: 5-7-11
Sample Forms
Eric R. KingOne Leadership Square, 15th Floor
211 N. Robinson Ave.
Oklahoma City, OK 73102
(405) 235-5518