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.”

I don’t know about you, but out here in Oklahoma there are a lot of division orders being sent out to mineral owners for the recently-completed wells that have been drilled in Beckham, Roger Mills, and other nearby counties. I expect the same is true for other areas of the state with activity as well.

The "Duhig" rule was developed to deal with the frequent problem of people accidentally drafting deeds that attempted to convey more property than they actually owned. There was actually a case called Duhig v. Peavy-Moore Lumber Company in 1940 (Texas) which is the namesake of this rule.

THE LEASING PROCESS: An oil and gas lease is essentially a contract between you, the “lessor”, and another party, the “lessee.” In most states a lease is also considered a conveyance, since you are essentially signing over your right-to-drill for and produce your oil and gas to an oil company in exchange for the agreed upon terms in the lease. They will in effect “own” the minerals, but only for the term of the lease.