Phillips Murrah Director Melissa Gardner is featured in an article published on June 3 at Oklahoma oil and gas industry online resource, Oklahoma Minerals, by founder, Gib Knight. The article, titled “Oklahoma Forced Pooling,” references a Q&A Gardner published in the Oklahoman in August 2017, titled “Forced pooling in mineral land leasing has upsides, downsides.”
From the Oklahoma Minerals article:
Back in August of 2017, Paula Burkes with NewsOK interviewed Melissa R. Gardner who is a Director and attorney at Phillips Murrah P.C., and practices in the Energy & Natural Resources Practice Group. That interview provided some insight into the drawbacks and benefits of Forced Pooling. Here is an excerpt from that interview:
Q: What are the pros and cons of leasing versus being made subject to a forced pooling order?
A: If you choose to sign a lease, you will have the ability to negotiate more of the specifics of the usage of your minerals. You are in a position to get the oil and gas companies to agree to some conditions and special provisions. If you are subject to a forced pooling (as managed by the Oklahoma Corporation Commission), you’re not in a position to negotiate these details.
Second, you can negotiate bonus and royalty costs. If you are subject to a forced pooling order, you’re given three options, being a combination of the prevailing prices in the surrounding areas, with no option to negotiate those prices. In the alternative, if you allow yourself to be subject to the OCC forced pooling order, the applicant is given a shorter time within which it has to commence operations. The average lease is valid for three to five years, whereas the average pooling order is valid for six months to a year, both of which extend after production has been initiated. This keeps your minerals under contract for a shorter period of time.
Additionally, the minerals only are forced pooled as to certain, limited geological formations. If a well is drilled and producing from those zones, your minerals are still open and unleased as to other, non-pooled zones. In the alternative, most leases cover all depths or, at a minimum, from the surface to a certain depth below the surface. Finally, forced pooling orders expire at the end of production. If a producing well is drilled during the first year of a five-year lease and only produces for two years, the lease remains valid, and your minerals remain unmarketable for re-lease, for an additional three years.
To find out more about how forced pooling affects you or your business, you may contact Melissa Gardner by visiting her Attorney Profile here.