1. Pooling Cost Determination Change of Operator
Week Four
September 15, 2011
Eric R. King

2. 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
One purpose of the forced pooling statute is to eliminate the “roadblock effect” that would allow one owner within the unit to frustrate the economic development of the unit
Purpose of the forced poling statue is to equalize the risk of loss between non-consenting co-tenants by forcing them to determine in advacne whether thety will share or not in the benefits and risks of exploration
It hass been said that the spacing order sets the stage for development and guards the public interest in developing an orderly and judicious drilling program, it is aimed at protecting the interest of all by the prohibitions against waste.
See – Tenneco v El Paso 687 P.2d 1049 (Okl. 1984)

3. OAC 165:5-7-7: Pooling

4. OAC 165:5-15-3: Pooling Orders

5. May your negotiations as a Landman on values be as sharp as this couple’s math.

6. Cost Determination “Motion” OAC 165:5-7-7(g)
(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.

7. Pooling Cases Pooling cases summarized
Be sure and review case number 52 and 53 involving Harding and Shelton.
52 – The court found here that a pooled interest was still valid notwithstanding the fact that the underlying lease may have been released
To allow the opposite result “would cast the established rights and obligations of any holder of a mineral interst in the previously pooled common source(s) into chaos every time there was a change in ownership of mineral or leasehold rights in any pooled formation”.
Prior pooling is unit 1. Includes not all of the common sources of supply
Unit 2 is polling previously un-pooled common sources of supply
53 – Requiring participation in subsequent wells or forfeiture of working interest is an unconstitutional taking who owned no interest in the unit 2 common sources of supply.

8. Participant’s Right to Share in Force Pooled Acreage
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 also Michael L. Decker’s article, In Search of a Visage of Truth – Rulemaking or Adjudication at the Corporation Commission, 60 OBAJ (1989)

9. Strategy in Enforcing Such Right

10. Unusual Overburdened Transactions
1/4 royalty
Bonus of $500 per acre to be paid within 2 years of execution of lease
100% back-in after payout
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)

11. Unusual Overburdened Transactions
40% burdened leases delivering a 60% NRI

12. We are fortunate to have captured the reaction of a news anchor regarding the acceptance of the unusual overburdened transactions
Bruce Almighty Clip

13. Overburdened Transactions

14. The Treatment of Excessively Burdened Working Interests Under a Pooling Application

15. See “A Primer on Forced Pooling of Oil and Gas interests in Oklahoma” by Charles Nesbitt, 50 O.B.J. 648 (1978)

16. A clip that explains the hierarchy at the Corporation Commission

17. Mineral Owners and Oil Companies
1:13 time
Commissioners
Mineral Owners and Oil Companies
The Lawyers

18. Change of Operator 165:

19. Sample Forms

20. One Leadership Square, 15th Floor
Eric R. King
One Leadership Square, 15th Floor
211 N. Robinson Ave.
Oklahoma City, OK
(405)