The Oklahoma Bar Journal May 2024

N atural R esources L aw

Reexamining Nesbitt: How Horizontal Wells Have Changed Pooling in Oklahoma Oil and Gas Law By Ronald Merrill Barnes, Grayson Merrill Barnes and Denver Morrissey Nicks I N 1979, THE OKLAHOMA BAR JOURNAL PUBLISHED AN ARTICLE titled “A Primer on Forced Pooling of Oil and Gas Interests in Oklahoma,” which detailed the intricacies and applications of the state’s forced pooling statute. Authored by Oklahoma attorney Charles Nesbitt, the article may have had an unassuming title, but its effect was anything but modest. In the years since it first appeared, Mr. Nesbitt’s primer on forced pooling has become extremely influential. Decisions of the Oklahoma Corporation Commission (Corporation Commission) on pooling matters frequently cite the piece and generally mirror Mr. Nesbitt’s positions.

first appeared in print. Many of those changes have direct rami fications on some of Mr. Nesbitt’s assumptions and conclusions, particularly with respect to well spacing, correlative rights, operator selection and, most importantly, the doctrine of waste. Some of these changes relate to the development of case law, in which questions of law that had not been definitively answered in 1979 are settled today, while others reflect changes to the standard terms now common in pooling orders and operating agreements reached privately between the parties. Technological changes since Mr. Nesbitt wrote his seminal article – most notably

Mr. Nesbitt defined forced pooling thusly: “The law provides that where there are separately owned tracts, or undivided inter ests, or both, within an established spacing unit, and the owners have not voluntarily agreed upon joint development, and one owner pro poses to drill a well on the unit, the Corporation Commission may ‘require such owners to pool and develop their lands in the spacing unit as a unit.’” While that description remains as serviceable today as ever, and Mr. Nesbitt’s 1979 article has remained influential, the energy industry has changed considerably in the 40-plus years since the article

Reports of administrative law judges and referees routinely cite Mr. Nesbitt’s article as the author ity for decisions on fair market value determinations, selections of operators and other matters related to forced pooling. Thus, when appellate courts cite the Corporation Commission in their decisions, they are very often adopting Mr. Nesbitt’s positions into case law. Perhaps that level of impact was to be expected from an article authored by a Yale educated lawyer who served as the state’s attorney general before spending seven years as a member of the Corporation Commission, nearly all of them as its chair.

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

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THE OKLAHOMA BAR JOURNAL