If you own minerals or royalties near federal or state lands in New Mexico — especially in active areas like Eddy and Lea Counties — you may have encountered the term “communitization agreement.” Understanding how these agreements work can help you make sense of your royalty checks and the value of your interest.

What Is a Communitization Agreement?

A communitization agreement (often abbreviated CA) is the federal equivalent of pooling. When a drilling or spacing unit includes federal lease acreage that can’t be independently developed — for example, a 320-acre or 640-acre horizontal well unit that crosses federal, state, and fee tracts — the operator combines the tracts into a single unit for development under a communitization agreement approved by the Bureau of Land Management (BLM).

How It Affects Your Royalties

Once a CA is approved, production from anywhere in the communitized area is allocated to each tract based on its acreage share of the unit. That means:

You’re paid on your allocated share — your royalty is based on your tract’s percentage of the unit, not on whether the wellbore physically crosses your land.

Your lease is held by unit production. Production allocated to your tract under the CA generally maintains your lease in effect, the same as direct production would.

The effective date matters. CAs typically have an effective date that can precede BLM approval, which affects when royalty obligations begin and can be relevant in HBP determinations.

Common Issues We See

In our title work across southeast New Mexico, communitization-related issues come up regularly: acreage allocations that don’t reconcile with the recorded CA exhibit, wells producing under a CA whose effective date creates a gap question for HBP purposes, and confusion between state pooling orders (NMOCD force-pooling) and federal CAs on mixed-ownership units. These details directly affect both what you’re owed and what your interest is worth.

Own Minerals in a Communitized Unit?

Husky Land Services has deep experience with federal and state lease title in New Mexico, including communitization agreements, BLM lease records, and NMOCD proceedings. Whether you want help understanding your interest or a cash offer for your minerals or royalties, contact us today.