Mineral Interest Pooling Act – Voluntary and Compulsory Pooling!
January 3, 2018
The sale of mineral rights in Texas involves a number of rules and laws that affect those who offer their mineral rights for sale. One such rule is the Mineral Interest Pooling Act. This is a clause that is important to the ownership or leasing of mineral interests. It can be written in two different ways, as a voluntary pooling clause or a compulsory pooling clause.
As a mineral rights owner, you should understand how pooling clauses can affect your land and rights ownership and the difference between the two types.
What Is Mineral Interest Pooling?
Mineral interest pooling is the process of grouping multiple small interest ownerships together to facilitate extraction and make it more efficient. Instead of drilling in many locations to access small deposits, energy companies can find a suitable area to drill once, extracting from multiple small deposits at the same time. Pooling saves money, conserves the environment, and allows multiple interest owners to get paid from one drilling effort.
While mineral interest pooling does greatly reduce extraction costs, it also requires agreements from the involved owners of the mineral rights for sale as well as surface owners. Pooling grants permission to drill anywhere within the pooled area as opposed to only within a specific leased area. It also dictates that mineral rights owners involved in the pooling will accept payment for the sale of mineral rights proportionate to the size of their pooled interest.
What Is Voluntary Pooling?
Voluntary pooling is when mineral rights owners voluntarily agree to allow the pooling of their deposit with others to obtain the most benefit from the resources they own, while keeping costs down. Voluntary acceptance of pooling is normally written into lease contracts or land titles that record interest ownership. Although most owners in Texas typically agree to voluntary pooling, as an owner you must understand that doing so can amend your lease contract in a variety of ways.
Most notably, voluntary pooling changes the granting clause and how long a company may hold an affected portion of land after lease expires, even if you wish to lease the land to someone else or do something different with the land.
What Is Compulsory Pooling?
Compulsory pooling or forced pooling is when interested owners are legally required to pool their mineral rights for sale. Usually, this occurs when an energy company wants to drill in a certain area where most of the interests have been voluntarily pooled, yet one owner has opted against giving voluntary permission. In these situation, companies who wish to pool interests so they can proceed with a drilling project must obtain the legal right to do so.
If attempts to convince an owner to include their sale of mineral rights in the pool fail, the company can then apply for an involuntary pooling order. If pooling the property in question would be beneficial by reducing the destruction of the environment and/or considerably reducing a company’s cost to drill and extract other resources, the owner may be required to comply with the pooling.
Mineral interest pooling can be beneficial to both the energy companies drilling to extract resources from the ground and owners of mineral rights for sale. It gives companies a means of extracting a larger volume from many small mineral rights interests at the same time, allowing all involved parties to profit.
To fully understand how mineral interest pooling could affect the ownership and sale of your mineral rights, it is recommended that as an interested owner, you discuss this clause with a royalties expert or lawyer experienced in the buying and selling of mineral interests!
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