Replies to This Discussion

Permalink Reply by Laman_71106 on January 19, 2009 at 15:12

Jon, a friend called me today and told me an Encana Landman had contacted him and offered $4000 per acre & 25% in 16N 14W 14. Thinking I'd rather be force pooled. Good Luck to you!

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Permalink Reply by Jon, landowner on January 20, 2009 at 1:41

Laman, In a way I do understand where you are coming from on force pooling, BUT in the section that we are speaking of I was force pooled six years ago and to this day nothing. on goH/S there are a lot of really good post. A lot of them get over my head,I can only speak from experience--Thanks for the info

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Permalink Reply by Dion Warr, CPL on January 20, 2009 at 2:40

Laman:

IMO people are under the impression that if one doesn't take the offer on the table, or make a counteroffer, or simply refuses to lease, that the O&G company will just say "oh well, that's OK," and then force pool the section and drill anyway. While this is certainly a possibility, if more than about 10-20% of the unit (admitted: that percentage may vary somewhat) refuses to lease, chances are that the company will just go somewhere else and drill where the cost vs. return economics are better for them.

If one is perfectly willing to wait and see if the bonus/royalty offers improve and be content that nothing may be drilled and no royalties generated until the leasehold in the unit is more or less sewn up, that is fine. Whether a unit is formed and a 640(±)-acre area is force-pooled is not an indication that the petitioning O&G company is ready to drill your section. It can indicate their interest in doing so, but the petitioner / lessee / operator is under no obligation to drill just because a unit is formed and approved.

Personally, I find it a little unsettling that some lessees are putting the onus of disseminating lease offers and assembling a lease block into the hands of the l/o's. At best, it is incentivizing (to coin a phrase?) the l/o's to form a block and understand that they have a personal stake in getting a well drilled and royalties flowing (which can be good); at worst, however, it is an attempt to 'divide and conquer' by playing l/o's (neighbors) against each other to the benefit of the O&G company's bottom line (selfish-landman-centric point: if the l/o's just 'round themselves up' to lease and the O&G company merely circulates the standing offer to l/o's directly, what does one need a landman for?)

Seriously, putting together a lease block for a client isn't usually done for free. What does the enterprising unit-assembling l/o get out of this deal? Cash? Better terms? An override?

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Permalink Reply by Bobi Carr ("parker") on January 20, 2009 at 5:28

Dion,

One suit that is presently on file in Bossier Parish proves your point.

The person that signed his neighbor got an override.

I THINK THERE SHOULD BE COMPLETE DISCLOSURE WHEN ANY PARTY RECEIVES AN OVERRIDE.

I have mentioned the possibility of this type of shenanigans in the past. I'm glad that you are bringing it to the forefront.

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Permalink Reply by kane on January 20, 2009 at 3:27

$4000 per acre seems like a great deal right now considering the current commodity prices and the fact that so many rigs are being let go.

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