Pooling

Pooling is the combining of separately owned tracts or interests within a drilling or spacing unit so that one well can develop the unit and production is shared among the owners. It can be voluntary, by agreement or under lease pooling clauses, or compulsory, by order of a state conservation agency. Pooling combines interests within a unit. Setting the size and shape of the unit is spacing (see Spacing Unit), and combining leases across a field or reservoir is unitization (see Unitization).

Compulsory pooling by state statute

• North Dakota. When separately owned tracts or interests are within a spacing unit, "the owners and royalty owners thereof may pool their interests." Absent voluntary pooling, the Industrial Commission "upon the application of any interested person shall enter an order pooling all interests in the spacing unit" (N.D.C.C. 38-08-08(1)). Production allocated to each tract "must, when produced, be deemed for all purposes to have been produced from such tract by a well drilled thereon."
• Oklahoma. Where owners "have not agreed to pool their interests and where one such separate owner has drilled or proposes to drill a well on the unit," the Corporation Commission "shall, upon a proper application therefor and a hearing thereon, require such owners to pool and develop their lands in the spacing unit as a unit" (52 O.S. 87.1(e)). An unleased owner is treated "as a lessee to the extent of a seven-eighths (7/8) interest" and "a lessor to the extent of the remaining one-eighth (1/8) interest" until an election is made under the pooling order.
• Texas. Under the Mineral Interest Pooling Act (Tex. Nat. Res. Code chapter 102), the Railroad Commission may pool interests in a proration unit, which "shall in no event exceed 160 acres for an oil well or 640 acres for a gas well plus 10 percent tolerance" (102.011). The applicant must first make "a fair and reasonable offer to pool voluntarily" or the application is dismissed (102.013). Production is allocated to tracts by surface acres unless that does not give each tract its fair share (102.051).

Federal leases: communitization

Federal leases join state spacing units through communitization agreements. Under 30 U.S.C. 226(m), when separate tracts "cannot be independently developed and operated in conformity with an established well-spacing or development program," a lease may be "pooled with other lands, whether or not owned by the United States, under a communitization or drilling agreement providing for an apportionment of production or royalties." Under 43 CFR 3105.23(a) the agreement "must describe the separate tracts comprising the drilling or spacing unit" and "must show the apportionment of the production or royalties to the several parties."

Why it matters in mineral title research

• Every owner in the unit, leased and unleased, has to be identified, because the pooling order or agreement allocates production to each tract.
• A pooling order changes what each owner receives. Its elections and deadlines have to be read, not assumed.