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First, for those of you not familiar with the phrase “drive-by pooling”, it is used in Oklahoma to describe the scenario in which an oil company applies to the Oklahoma Corporation Commission for a forced-pooling without first fulfilling the requirement of making a “bona fide effort to reach an agreement” with affected mineral owners, in the form of an oil and gas lease, prior to their application.
After receiving yet another very small class action settlement check in the mail the other day, I have decided I will probably be "opting out" of the next class action that comes my way. I would rather not participate at all than be subject to a specious payoff of dubious benefit. Class actions in general are not the great equalizers they claim to be.
The “Marketable Condition Rule” used in oil and gas royalty valuation has been adopted in a growing minority of states, including Oklahoma. It is often viewed as an extension of the lessee’s “implied covenant to market” and states that production is not complete until the lessee has not only captured the production at the wellhead, but also has placed it in marketable condition. Any costs incurred to make the production marketable are not deductible from royalty.
The price someone would be willing to pay for your mineral rights will vary from buyer-to-buyer, as there are many factors that determine value, and buyers interpret them differently depending on their particular biases for a given area.
Cash is a sure thing, and by selling, you receive a sure thing and transfer the risk of ownership to the buyer. Since they are in the “risk business” this works well for both parties. Energy prices are volatile and unpredictable, and many people who own mineral rights would rather not deal with the risks associated with ownership.
At a minimum, a no-deductions clause is supposed to prevent your lessee from deducting the costs they incur in transforming your share of the raw natural gas they bring to the surface into a marketable product. “Marketable” can be defined as “sufficiently free from impurities that it will be taken by a purchaser.”