Hi Mr. Scott:
* An operator has an oil flood in which certain properties were never leased. Although the owners were local and highly visible they were also omitted from the named properties in it's petition for forced pooling. No royalties ever paid to those owners.
* Later the operator drilled two horizontal wells. Although both were permitted as oil wells, one was used as an unpermitted flood well the other as a collection well. The collection well actually terminates under the property of one of the unleased, un-named properties within the forced pool agreement.
* I entered into lease agreements with these un-leased properties who were also un-named in the forced pooling petition. BTW, properties have not changed hands, same owner before and now.
* I found I had enough lease property to drill a well so I obtained a permit and drilled. Next came a letter from the operator's counsel ordering me to cease and desist and threatening tresspass.
* My argument is the forced pooling agreement creates an artificial boundry consisting of the properties actually leased and the properties named in the petition for forced pooling. Just because a property lies within the artificial boundry doesn't automatically include it. Otherwise, why would there be a requirement to petition the state for forced pooling, naming the properties to be included?
* I tried to negotiate with the operator but they seem to think their forced pooling agreement covers them for as far as they can see! Very arrogant. Became clear they would not budge without legal opinion.
* My lawyer says he can find no precedent for such a scenario in KY and since a lot of money is involved and since the operator has deep pockets, I am probably looking at years of costly litigation to prevail. He suggests a settlement conference and some face saving offer to the operator, perhaps either interest in well or he buys out my position.
* I have about $250,000 in the well and leases. I have no idea how to settle with operator.
* Your suggestions for settlement or other observations would be greatly appreciated.
Thanks!
Tags: Forced, include, pooling, properties, Unleased, unnamed