Replies to This Discussion

Permalink Reply by Ben Elmore on June 13, 2011 at 8:30

The drilling unit plat filed with the P-12 to get a permit is often revised after the well is drilled.  So, yes, an operator can reduce the size of the unit after the well is drilled, subject to its duty to act as a reasonably prudent operator and its duty to exercise its pooling authority in good faith.  If I am understanding your other question correctly, it is, does the surface acreage in the unit correlate to the minerals in the unit.  The answer is yes, but bear in mind that there can be undivided owners of minerals at different depths, and untis can be limited to certain depths.  In other words, if you own only a mineral interest in all depths beneath the Austin Chalk, and the unit is created that covers only to the base of the chalk, your interest is not pooled. 

 

I think I answered your question.

Permalink Reply by adubu on June 13, 2011 at 8:42

Ben-- yes you did -- clarify---I understand if your undivided interest included the formation drilled and produced without dept clause i.e. all depths and under surface on plat kept in unit then they could not cut your undivided minerals out. -- Correct -- Thank You for help of understanding.

Permalink Reply by Ben Elmore on June 13, 2011 at 8:47

Correct.  If you own an undivided interest in the formation drilled under the unit, you cannot be cut out.

Permalink Reply by J B Nabors on June 16, 2011 at 12:40

Wow.  I have been dealing with Louisiana O&G law now for 2+ years.   Texas O&G law seems to be an entirely different kettle of fish.  

 

Here is the situation:

Our family received a mineral lease offer for property in Angelina County, TX.  I don't know where to begin to ask questions, but let's start here:

 

1.  What is the procedure for establishing an O&G drilling unit in Texas?

 

2.  If we decline the offer, can our land be force-pooled by the driller/developer?

 

3.  If we decline the offer, can our land be entirely cut out of any projected unit?

 

4.  Even if we are surrounded by other units?

 

5.  If we are isolated by being cut out, do we have any recourse to having our minerals developed?

 

6.  If we decline the offer, and our land can be (and is) force pooled by the driller, do we get any royalty?  How is that decided, and what is the procedure?

 

7.  If the driller developer has applied for a unit, then decides not to lease from us, can the driller then modify the unit (downsize it) to exclude us?

 

8.  How can one find out what bonuses were paid to other mineral owners in a unit?

 

9.  How can one find out details of a unit establishment in Texas?  (Where, when, who, etc.)

 

10.  At first glance, it appears to me that the individual mineral owner in Texas is completely helpless.  (In Louisiana, units are generally uniformly sized and coincide with geographical sections, or portions thereof.  When a drilling unit is established, all minerals within that unit are 'pooled')

 

I would appreciate any help that anyone can provide!

 

 

 

 

Permalink Reply by Ben Elmore on June 17, 2011 at 4:20

There is a lot to your questions.   First, there is no automatic forced pooling in Texas.  See the discussion in this group on Rule 37 Exceptions and the Mineral Interest Pooling Act (MIPA).

 The procedure for establishing a drilling unit is, in short, the operator obtains leases on as much of the acreage as it can that it intends to include in the drilling unit.  It then files with the RRC a P-12 form identifying the unit and tracts to be included in the unit.  On this form it must identify any unleased interests included in the unit.  Along with the P-12, the operator will file a plat of the unit and a Form W-1 drilling permit.  Once the RRC approves the permit, the oeprator is off and running.  If there are unleased interests included in the unit and the well location (if vertical well) or also the horizontal drainhole (if horizontal well) comes within the minimum spacing requirements of the unleased interest, then the operator is required to seek a Rule 37 exception to the spacing requirement, at which time the unleased owner is given notice and an opportunity to object (again, see the discussion on Rule 37 exceptions and MIPA).

 

If you decline the offer to lease, yes you can be cut out of the unit, as discussed above, if you are a non-drillsite tract.  In this regard, your only recourse is to accept the operator's lease offer or find another operator to lease your land, which is not likely if you are already surrounded by land leased by the operator who's offer you rejected.

 

The RRC website provides ample information and a fairly user-friendly way of searching for W-1s and finding info on wells. 

 

The best way to find out what other mineral owners in your area have been offered or accepted for bonus and lease terms is to ask your fellow mineral owners, contact a friendly landman knowledgeable about the area and who often helps mineral owners, and/or contact an oil and gas lawyer.  As most people on this site will tell you, an oil and gas lease is a binding contract that you are stuck with for the life of the lease, so it is worth your while to hire an attorney to represent your interests.

 

I don't entirely agree that the mineral owner in Texas is helpless.  Certainly our Texas Supreme Court and Legislature the past 15 years have tended to expand the operator's rights to the detriment of the mineral owner, but this just means the mineral owner has to be educated about how things work in Texas.  The days of the Texas mineral owner sitting back and accepting his "mailbox money" and doing nothing else are long gone.  You are making a good start in that regard. 

Permalink Reply by Hale Yayuh on June 17, 2011 at 7:23

Ben, if the Lessee has made a lowball offer and I am not the drillsite, and I reject it, then decide I gotta accept it, else get cut out, and we have not even discussed the lease contract. And he then rejects a depth clause that I request. I have to accept it -- his way or no way? Man, it's confusing.

Also, heck, they might not even KNOW the drillsite at the time of leasing.

Permalink Reply by Ben Elmore on June 20, 2011 at 3:53

You can always ask for a preliminary plat of the unit.  If they know you are considering accepting their terms on receiving proof that you are not a drillsite tract, they might give it to you.  Also, check the RRC website for W-1 drilling permits under the operator's name or RRC number and see if they have already filed one.

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