Unleased owner problems getting accurate timely force pooled revenue??
Many people here have referred to the significant but ill-defined difficulties with getting force pooled revenues. But what if I don't do anything? Will I not get anything? Will I only get a small fraction or 80% or 50% or only 10% or less of what I am owed? Will it be many months or years after well payout before my revenues start, if at all? Will I have to expend large legal sums and go to court or hire an expensive O&G accounting service to obtain what I am owed?
GETTING MY MONEY..
Say my 10 acres is forced pooled and a producing well is completed. Also, say I am senile, or living in Siberia or Tahiti, or on the lam from the feds, or in prison, or otherwise. Say I don't have the time, energy (retired), funds, legal resources, knowledge or inclination as an out-of-state or out-of-country mineral owner to track drilling costs, operating expenses, well payout, etc, etc. Does lots of problems getting my money suggest that I might not get any money or possibly only a small fraction, if any, of what I am legally owed and even then it may take long after well payout (years?) before I start getting ANY revenue from well production?
What I am wondering is will a force pooled owner with little or no financial management or tracking efforts receive significantly more revenue (not necessarily the maximum or optimum amount owed and not until well cost is recovered) than if he/she were leased. Or, is it likely that a well operator will delay or postpone informing force pooled owner(s) of well payout and not initiate revenue payments until the owner raises the issue? Is having to go to court one of the likely problems to get my money? Can anyone post a good list of "lots of problems" a force pooled owner will face to get their money?
Sorry, all I have are questions and no answers.
GETTING MY MONEY..
Say my 10 acres is forced pooled and a producing well is completed. Also, say I am senile, or living in Siberia or Tahiti, or on the lam from the feds, or in prison, or otherwise. Say I don't have the time, energy (retired), funds, legal resources, knowledge or inclination as an out-of-state or out-of-country mineral owner to track drilling costs, operating expenses, well payout, etc, etc. Does lots of problems getting my money suggest that I might not get any money or possibly only a small fraction, if any, of what I am legally owed and even then it may take long after well payout (years?) before I start getting ANY revenue from well production?
What I am wondering is will a force pooled owner with little or no financial management or tracking efforts receive significantly more revenue (not necessarily the maximum or optimum amount owed and not until well cost is recovered) than if he/she were leased. Or, is it likely that a well operator will delay or postpone informing force pooled owner(s) of well payout and not initiate revenue payments until the owner raises the issue? Is having to go to court one of the likely problems to get my money? Can anyone post a good list of "lots of problems" a force pooled owner will face to get their money?
Sorry, all I have are questions and no answers.
Tags: forced, pooling, problems, recovery, revenue
Views: 198
Replies to This Discussion
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Permalink Reply by Spring Branch,mineral owner on
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KB, you and I both know there is no such thing as perfect knowlege. At this point in time, with the internet and over 10,000 members of this web site, I strongly feel that the knowlege of the "game" is about as good as it's going to get. Remember, by the time everyone learns the "rules" as they exist today, you can bet your bottom dollar the "rules" will change. What form will the "rules changes" take....I have no clue. I would need tommorrow's Wall ST Journal, today. But they could be that deflation sets in for an extended period of time.....years, not months......and today's $5,000 an acre to lease looks like last August's $25,000 an acre to lease. Last January, 2008, I would have jumped all over $500 an acre to lease. Today, I'm being offered 10 times that amount. Many of the savy oil and gas operators were selling out fields that were Haynesville prospective at just the time the John Doe on the Street was calling for $20 gas. Did they have perfect knowlege??? No they didn't. What they had was experience. I can assure you that there is one thing I will never do.....NEVER. And that is lease for less than 1/4 royalty.
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Permalink Reply by Jay Murrell on -
Hello,
Does the quarter that you will henceforth require apply to a lease on depths from the surface to say....5,000'?
If so, I can pretty well assure you that you will not have too many takers. The economics for shallow production -- lets call shallow anything above the Hosston formation -- generally will not support a 25% burden.
Those shallow depths represent a good bit of what's drilled in North Louisiana by small independents.
Just wondering.
Best,
Jay Murrell
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Permalink Reply by Spring Branch,mineral owner on
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My extended family owns a substantial amount of minerals in Mississippi along the Mississippi River. Adams County among others. This is shallow Wilcox oil country @ 4000+ ft. For the last 20 + years, we have been getting 1/4 royalty from the independents. They balked for a few years until they finally decided it was either 1/4 royalty or no lease. An offset to that was that we would give them a three year paid up lease for a very favorable bonus.
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Permalink Reply by Jay Murrell on
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In the mid-80's I worked extensively in the Wilcox in Adams County and the surrounding counties in MS and Concordia and Catahoula in LA. You are absolutely right. We gave 1/4th royalties for leases with VERY short primary terms, like <1 yr. for a FREE (no lease bonus) lease in the Wilcox. One out of every 10 wells you drill in the Wilcox is a dry hole and when you made a well it was usually VERY good. Lots of reserves. One well would pay for the 9 dry ones, plus a nice profit.
That is a COMPLETELY different set of well economics from what we have in NW LA.
I am sure you didn't intend to, but comparing the MS Wilcox to our shallow prospects in NW LA is an absurdly bad fit.
Which makes my point, the HA ain't the Paluxy. -
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Permalink Reply by insomniacnla on
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For at least the past 5 or 6 years, some smaller, independent companies have been offering (and paying) 25% royalty on 4,200' Glen Rose wells here in Stonewall.
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Permalink Reply by Jay Murrell on
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The Glen Rose is pretty similar to the MS Wilcox (very hard to find, but REALLY swell when you do)...did they pay any lease bonus?
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Permalink Reply by Randy on
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Not as many of the ones leasing, but there are a lot of abstractors, surface guys, etc. Probably 1/3 to 1/2 of the ones doing leasing. If I was to guess.
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Permalink Reply by insomniacnla on
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Yes, every lease that I looked at received a lease bonus, except for one. That person passed on the lease bonus for a six month drilling commitment and a $50,000 penalty if the well was not drilled during that time period. Some received a favored nations clause in their leases also.
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Permalink Reply by Jay Murrell on
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Please explain "every lease I looked at had lease bonus..." How did you learn that?
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Permalink Reply by insomniacnla on
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This was for a shallow well a couple of years ago and it was a dry hole. Their family owns about 116 acres over here in section 1 near me. The unit size for the 4,200' well was 160 acres.
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