Anyone who owns mineral rights should ensure they understand how their property can be combined with others for oil and gas development. Pooling and unitization are two ways that this can occur.
Pooling refers to the joining of multiple mineral tracts so they can be used to efficiently produce resources from a reservoir. This can be done voluntarily or involuntarily. Unitization is similar, but it may involve a larger geological formation. It’s common for this to occur after production has begun. Both of these actions can prevent waste, maximize mineral recovery and maximize fair distribution of profits.
What happens when pooling is forced?
The official term for forced pooling of mineral rights is compulsory integration. Some states, including Oklahoma and Texas, have legal frameworks in place that permit this practice, but only under certain conditions. This can prevent owners who are holding out on the pooling from blocking development, but it is fraught with concerns about private property rights.
Property owners should understand their options and protections. Some of these depend on the jurisdiction that the property is located in. Some jurisdictions require that operators offer terms to owners who don’t have leases. This can include the option to participate in profits, to take a royalty or to remain without current income from the rights in exchange for proceeds in the future.
Anyone who has any mineral rights should ensure they understand exactly what rights they have. Understanding how revenues are calculated and monitoring the data regarding production are also important. It may be beneficial for anyone in this position to work with someone familiar with these matters so they can determine how to protect their interests.