This form is used when royalty owners are the owners of royalty and mineral interests in Tracts 1 and 2, subject to the terms of Lease 1 and Lease 2. Recognizing that each of the Royalty Owners may not own an Interest in both Tracts 1 and 2, or may not own an identical Interest in Tracts 1 and 2, it is their desire, together with Lessee, to pool and unitize these two Tracts for oil and gas operations.
Title: Understanding the New Mexico Pooling Agreement Between Lessee and Royalty Owners on Two Tracts, With Depth Limitation Keywords: New Mexico, pooling agreement, lessee, royalty owners, two tracts, depth limitation Introduction: A New Mexico pooling agreement between a lessee and royalty owners on two tracts, with a depth limitation, is a legally binding contract that allows multiple oil and gas leases to be combined and treated as a single unit for drilling purposes. This process streamlines operations by minimizing surface disturbance and maximizing resource extraction. This article aims to provide a detailed description of this pivotal agreement while highlighting any variations that may exist. Types of New Mexico Pooling Agreements: 1. Standard New Mexico Pooling Agreement with Depth Limitation: The standard version of the pooling agreement is used to consolidate multiple oil and gas leases on two tracts. It allows the lessee to pool the acreage and extract resources efficiently while providing royalties to the respective owners based on the terms and conditions agreed upon. 2. Depth-Limited New Mexico Pooling Agreement: The depth-limited pooling agreement imposes specific depth restrictions on the tract areas available for pooling. This type of agreement enables the lessee to target a particular geological formation while ensuring uninterrupted operations within the specified zone. Royalty owners are entitled to a share of production from this limited depth range. Key Elements of the Pooling Agreement: 1. Lessee's Obligations: The lessee is responsible for drilling, completing, and operating the pooled well(s) within the defined depth restriction. They must adequately maintain and operate the wells, bearing the costs associated with exploration, production, and surface use. 2. Royalty Owners' Rights: Royalty owners hold the right to receive a proportionate share of the production, which is typically determined by the acreage they hold in the pooled area. The pooling agreement outlines the percentage of royalty, method of calculation, and payment terms. Royalty owners are entitled to periodic payments or proceeds from the sale of oil and gas extracted from the pooled well(s). 3. Depth Limitation: The pooling agreement defines the depth limitation within which the lessee can operate the well(s). This restriction aims to safeguard the interests of all parties involved by delineating the specific geological formation(s) being targeted. The depth limitation ensures efficient exploration and extraction while respecting the boundaries of the agreement. 4. Allocation of Costs: The pooling agreement also addresses the allocation of costs incurred during drilling and production operations. These costs can include drilling and completion expenses, surface land damage compensation, and any necessary facility construction. The agreement outlines how these costs are shared among lessees and royalty owners based on their percentage of participation. Conclusion: A New Mexico pooling agreement between a lessee and royalty owners on two tracts, with a depth limitation, allows for streamlined and efficient resource extraction while protecting the interests of all parties involved. This legally binding contract provides a framework for operations, royalty distribution, and cost-sharing. By understanding the key elements and various types of pooling agreements, stakeholders can effectively collaborate and maximize the potential of their oil and gas assets in New Mexico.
