Oil and Gas Operators Share Less and Less Information
The last few years have demonstrated to me a disturbing trend. Fewer oil and gas operators, it seems, are taking the steps to provide their landowners with evidence of and information about pooling operations. Nearly all modern oil and gas leases provide for the pooling and/or unitization of mineral owner interests with those of neighbors into larger, more productive operations. The expense involved with deep well production requires these efforts and does result in fewer oil and gas well pads. These wells drill thousands of feet deep and thousands of feet horizontally to reach into the production units. One recent operator completed a horizontal lateral well that was nearly 31,000 feet long!
With these increased drilling lengths, pad sites many miles away are reaching out and extracting oil and gas from landowner properties. With these wells so far away, it is often not very evident to landowners their properties might have been included in units. Many operators have, by practice or obligation, sent copies of their pooling and unitization declarations to the landowners affected.
This practice allows landowners to see the size and shape of the production unit and to see how the operator has included their land. This gives the landowner the opportunity to investigate and question their potential interests. These documents are often followed by division orders asking landowners to certify their ownership percentages. More and more I am seeing landowners who never learn of the pooling of their land until they receive that division order or even their first check.
Landowners who believed their leases to have expired are soon surprised to learn of production involving their land. Couple that with the fact that many months often pass between the first well production and the first payment of royalties and many are left concerned and confused by what has happened. In just the last few weeks I have received several calls from local landowners who only now have learned their leases and properties had been unitized over three years ago and that well production had started about six months ago!
While many landowners are thankful and grateful to receive royalty checks, the industry has done its best to leave those individuals in the dark about many aspects of their operations. Landowners are essentially in business with these operators, but their business partners hide behind curtains of secrecy and often direct misinformation.
Don’t assume the oil and gas company you are dealing with has done the right thing or that they have your best interests at heart. If you have questions about your lease and your payments, do not hesitate to reach out to the company you are dealing with. If their answers or non-answers concern you, please feel free to reach out to Bordas & Bordas or companies like Bordas Mineral Management to see if your concerns are warranted.
Fewer oil and gas operators are taking the steps to provide landowners with evidence of and information about pooling operations. Jeremy McGraw explains.