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Pooling Cost Determination Change of Operator

Pooling Cost Determination Change of Operator. Week Four September 15, 2011. Eric R. King. The Forced Pooling Statute. In order to avoid the drilling of unnecessary wells To protect correlative rights Prevent economic waste

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Pooling Cost Determination Change of Operator

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  1. PoolingCost DeterminationChange 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

  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.

  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 2655 (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

  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. Commissioners The Lawyers Mineral Owners and Oil Companies

  18. Change of Operator 165: 5-7-11

  19. Sample Forms

  20. Eric R. King One Leadership Square, 15th Floor 211 N. Robinson Ave. Oklahoma City, OK 73102 (405) 235-5518

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