In re Petition of Luff Exploration Co.

Linda Golden owned a fifty percent mineral interest that was within a “spacing unit” in which Luff Exploration Company desired to drill for oil. Golden declined Luff’s offer to lease her mineral interest or participate with Luff in the cost of the drilling. After Luff decided to proceed with drilling, it filed a petition with the South Dakota Board of Minerals and Environment (Board) seeking to “compulsory pool” the mineral interests in the spacing unit and seeking “risk compensation” from Golden. The Board issued a compulsory pooling order and found that Golden should pay 100 percent risk compensation. The circuit court affirmed. The Supreme Court reversed, holding that the Board failed to comply with the plain language of S.D. Codified Laws 45-9-32 by granting a pooling order that contained no provision specifying a time and manner for Golden to elect to participate in the well by paying her proportionate share of the cost of drilling, equipping, and operating the well. View "In re Petition of Luff Exploration Co." on Justia Law