#LANDMANFRIDAYS
  • Happy Landman Friday
  • Landman Library
    • Landman 101
    • Professionalism & Ethics
    • State Specific Issues
    • Be #SmarterBetterFaster
  • About Us

Pooling Party

3/4/2022

 
Picture
A pooling/unitization clause is the clause that allows the lessee to combine multiple leases in order to drill a well that meets the relevant minimum acreage requirements (pooling) or create a drilling unit (unitization). It may also place certain limits on any unit of which it is to be part.

Without this clause, the only way to hold a lease by production (absent the use of forced pooling) was to drill vertically directly on the leased premises. This was the model for many years, but as spacing regulations and minimum acreage requirements began to be imposed, and then later horizontal drilling became more common, new needs emerged.
Horizontal drilling consists of lateral wellbores that usually extend below several parcels. This requires the operator to combine all of the necessary properties in a unit and pay the lessors royalties according to their proportionate share of the unitized lands. In order to include a lease in the unit, it must include a unitization clause that gives the right to do so to the lessee.
​
If the operator wants to include a lease that lacks a unitization clause, then it will have to negotiate an amendment or unitization agreement with the lessor. It would, of course, be easier if the clause had already been a part of the lease in the first place. For this reason, you will usually find it included in modern leases.

Comments are closed.

​​© Copyright 2022
  • Happy Landman Friday
  • Landman Library
    • Landman 101
    • Professionalism & Ethics
    • State Specific Issues
    • Be #SmarterBetterFaster
  • About Us