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QUESTION: Sec7-1N-5W Stephens County,Oklahoma
I have 6+acres leased to Continental Resources. Lease expires Jan.21,2016. The section was pooled and finalized March 19,2015.It is my understating that the pooling order takes precedent over the lease that expires in Jan. and Continental has at least a year from the March 2016 to drill a well. Since my lease expires in Jan., does Continental have to pay more bonus money or re-lease the acreage or do they get a free year to decide if they want to drill.

ANSWER: The terms of the forced pooling order prevail.  However, your lease was a pre-existing contract, so the forced pooling order can't serve to alter the terms of your lease.  If it expires on January 21, 2016, and a well has not been spud under the order by that date, then your lease expires. On January 22, 2016 your mineral rights interest becomes subject to the forced pooling order as "unleased" and if Continental intends to spud a well by the deadline stated in the order (you indicate that it is March, 2016), they would pay you the amount of bonus per net acre set out in the order before they spud.  Plus, you would receive the royalty rate set out in the order, not the royalty rate stated in the then-expired lease.  This, among other reasons, is why you were supposed to get a notice of the application for forced pooling back when you could have challenged it, especially if your lease royalty rate is higher than the pooling order royalty rate.

As of today, the oil price has dropped to $38 a barrel.  The natural gas price has dropped to $2.72 per mcf on NYMEX.  Financial incentive to drill wells appears virtually gone at the moment.  Unless Continental has a contractual obligation to drill a well on the unit formed by the forced pooling order (with partners), or there is a sudden and dramatic increase in the market prices for oil and gas, there is a reasonable expectation that they likely will not drill.  If they do not drill by the deadline set out in the order, the order will expire.

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QUESTION: That means that as of Jan. 22,2016 the acreage will be open to be leased or do I have to wait until March to lease. I have inquires to top lease but would prefer to wait on continental to either drill the lease or go away.

The terms of the force pooling order control. The force pooling order holds your lease beyond January 22, 2016, only as to the acreage included inside the pooled unit, and only as to the specific formation (depth range) stated in the order. All of the lands in your lease outside the pooling order and above and/or below the specific formation will expire on January 22, 2016.  However, the lands inside the pooling order and the depth range in that land that is described in the order are held under your current lease until March--possibly beyond March if the Operator spuds a well before the March expiration deadline. I apologize for not including this important information in my first answer.


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Marsha Breazeale, M.Ed., CDOA, CPLTA


All questions regarding division orders; ownership decimal calculations; title ownership and payer record changes (testate/intestate inheritance; deed; assignment; court order); oil and gas lease analysis for record-keeping and purposes of payment by operator or payer; pooling, horizontal wells, horizontal well allocation units; unclaimed property reporting; royalty owner relations questions. All questions concerning administration of surface land contracts and payment questions, such as for Surface Right-of-Way, Sub-Surface Right-of-Way, Easement, Surface Use Agreement. All questions regarding industry-standard and company-specific policies that affect land owners.


Sr. Staff Division Order Analyst. Certified Division Order Analyst (CDOA, National Association of Division Order Analysts) and Certified Lease Analyst (CPLTA, National Association of Professional Lease and Title Analysts) with 35 years of experience as a combination division order analyst and lease analyst in exploration and production in the oil and gas industry.

National Assoc. of Division Order Analysts (NADOA), National Association of Division Order Analysts (NALTA), American Association of Professional Landmen (AAPL), American Society of Trainers and Developers (ASTD)

"How an Oil & Gas Exploration & Production Company Operates" and "Principles of Oil & Gas Lease Analysis: Standard Clauses", Oil Patch Press; Articles in NADOA Magazine; LandFocus EDU Professional Training Manuals

Education/Credentials Management from Our Lady of the Lake University in San Antonio; M.Ed. in Instructional Design from WGU Texas.

Past/Present Clients
Past 15 years: GeoSouthern Energy Corporation; Contango Oil Co./Crimson Exploration & Operating Inc.; Apache Corporation; BP America; Marathon Oil; Newfield Exploration

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