Forced pooling and HB 1128 - 200% penalties on mineral holders

After finding out I was forced pooled yesterday, I've just discovered this somewhat unsettling piece of legislation known as HB 1128 that charges "non-consenting" mineral holders who have been forced pooled to pay a risk fee equal to 100% OF COST in addition to cost. Does anyone know the difference between "consenting" and "non-consenting"? Also, I have a current lease that will expire in October with Winchester, but Goodrich has already force pooled our section. Technically we are not "unleased" and it seems we shouldn't have to pay that enormous risk fee. Any info would be greatly appreciated.

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Permalink Reply by hoover182 on August 15, 2008 at 6:02
In the immortal words of Steve Martin:

"Well, excuuuuuuuuuse me!"
Permalink Reply by hoover182 on August 15, 2008 at 6:15
Thanx, I'll go through them. Maybe by the time I'm done I'll be getting my first check in the mailbox.
Permalink Reply by hoover182 on August 15, 2008 at 6:03
Thank you very much.
Permalink Reply by SharonB T18N R15W S8 on August 15, 2008 at 6:08
Look - here is the code as posted by Grice (thanks) ---- I'm going to add asterisks to the areas you are talking about so you'll see it....


When two or more tracts of land are within a drilling unit, the owners may agree to pool their interests and to develop their lands as a drilling unit.

Where the owners have not agreed to pool their interests, the commissioner shall require them to do so and to develop their lands as a drilling unit.

All orders requiring pooling shall be made after notice and hearing.

The terms and conditions will afford the owner of each tract the opportunity to recover or receive his just and equitable share of the oil and gas in the pool without unnecessary expense.

The portion of the production allocated to the owner of each tract, when produced, be considered as if it had been produced from his tract by a well drilled thereon.

In the event pooling is required, the cost of development and operation of the pooled unit chargeable to the owners therein shall be determined and recovered.
Any owner drilling may, by certified mail, return receipt requested, notify all other owners in the unit of the drilling and give each owner an opportunity to elect to participate in the risk and expense of such well.

Such notice shall contain:
An estimate of the cost of drilling, testing, completing, and equipping.
The proposed location of the unit well.
The proposed objective depth of the unit well.
All data from the unit well which has not been made public.

Election to participate must be exercised by mailing written notice, by certified mail, return receipt requested, to the owner drilling the unit well within thirty days after receipt of the initial notice.

Failure to give timely written notice of the election to participate shall be deemed to be an election not to participate.

Another notice must be sent if the drilling of the proposed unit well is not commenced within ninety days after receipt of the initial notice.

Should a owner elect not to participate (or should elect to participate and then fail to pay his share of expenses within sixty days of receipt of detailed invoices), the owner drilling same shall, be entitled to own and recover the nonparticipating owner’s allocated share of the expenditures incurred in drilling, testing, completing, equipping, and operating the unit well, a charge for supervision, ******a risk charge (risk charge shall be 100 percent of the cost of drilling, testing, and completing the unit well).******* KEEP READING AND LOOK FOR ASTERISKS ******

Any owner not notified shall bear only his share of the expenditures incurred in drilling, testing, completing, equipping, and operating the unit well, including a charge for supervision.

Should a drilling unit be created around a well already drilled, the provisions for notice, election, and participation shall be applicable; however, the cost of the well shall be reduced in the same proportion as prior production in which said tract did not participate prior to determining the share of cost.

Should a drilling unit be revised to include an additional tract, the provisions for notice, election, and participation shall be applicable; however, the cost of the unit well shall be reduced in the same proportion as prior production in which said tract did not participate prior to determining the share of cost.

Should a drilling unit be revised to exclude a tract, the cost of the unit well shall be reduced in the same proportion as the prior production, to determine the share of cost to the subsequently excluded tract or tracts.

********The provisions with respect to the risk charge shall not apply to any unleased interest. ********* THIS IS THE SENTENCE THAT CONFIRMS UNLEASED LANDOWNERS ARE NOT SUBJECT TO 200% RISK PENALTY. The royalty owner and overriding royalty owner shall receive that portion of production due to them under the terms of the contract creating the royalty.

In the event of a dispute relative to the calculation of unit well costs, the commissioner shall determine the proper costs.

If there is unleased interests for which the party entitled to market production have not made arrangements to separately dispose of such production, and the unit operator proceeds with the sale of unit production, then the unit operator shall pay to such party's pro rata share of the proceeds of the sale within 180 days of the sale.

Should the owners within a drilling unit fail to agree upon the pooling of the tracts, and should it be established by judgment of court that the commissioner is without authority to require pooling, then the owner of each tract within the drilling unit may drill thereon. The allowable production shall be proportion for the full unit, as the area of the separately owned tract bears to the full drilling unit.
Permalink Reply by hoover182 on August 15, 2008 at 6:15
Thanks for the info Sharon. I'll study it closely.
Permalink Reply by msfva on August 15, 2008 at 7:41
Hoover182,
You could do many of us a favor if you would start a blog of your experience. We are looking for someone who has really been force-pooled to tell us what happens. Does the o&g company keep you informed? Do they send you your royalties regularly? Do they trash your property? Do you have to dog them daily to get what you're owed? We'd all like to follow you through this, to see if this is a good or bad experience.
Please start a blog, and tell us how it goes.
Permalink Reply by hoover182 on August 15, 2008 at 8:45
Msfva:

I would be more than happy to. Right now I am a bit confused about the whole thing, but am working toward figuring out my situation. Much of the info on this board is very helpful, but there really is no substitute for legal counsel. The old saying "you get what you pay for" is especially true when it comes to seeking out expert advice. Once I have knowledge I think is reliable and helpful I'll share it with others. Good luck.
Permalink Reply by drillbit on August 15, 2008 at 9:25
TITLE 30
MINERALS, OIL, AND GAS AND
ENVIRONMENTAL QUALITY
SUBTITLE I. MINERALS, OIL, AND GAS
CHAPTER 1. COMMISSIONER OF CONSERVATION
PART I. DEPARTMENT OF CONSERVATION
RS 30:3
§3. Definitions

Unless the context otherwise requires, the words defined in this Section have the following meaning when found in this Chapter:

(8) "Owner" means the person, including operators and producers acting on behalf of the person, who has or had the right to drill into and to produce from a pool and to appropriate the production either for himself or for others.

Amended by Acts 1976, No. 122, §2; Acts 1984, No. 768, §1; Acts 1993, No. 113, §1.
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