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Permalink Reply by bullbayou on September 3, 2008 at 1:51

Being forced pooled (people are making a big deal of this but it really means nothing) just means your property has been included in a unit which is a really good thing. It is not bad. Your property is just still unleased, nothing more. You can lease it on your terms if you want, or you don't have to lease. This is America. People on this site are really stupid about "forced pooling." You can still negotiate with O & G companies on your lease just as if you were not force pooled (included in a unit). Hell, you can still negotiate a lease on your property that has been included in a unit even after a well has been drilled and producing.

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Permalink Reply by CWGray on September 3, 2008 at 2:38

A unit is comprised of 640 acres. The O & G company must lease at least 70% of the 640 acres in order to "force pool" the remaining 30%. If you are force pooled, you will receive 100% of the royalties from the producing well. (that's 100% of the royalties for your acreage), however, you will also be responsible for your share of all production costs. The O & G company will generally deduct any production costs from your royalties before you even see the check. The risk is......you are force pooled and the well doesn't produce for many years, you will not see a dime until it starts making a profit. If you negotiate before the well is in place, you get the bonus payments but only 25% of the royalties. You can still negotiate with the O & G company but they do not have to negotiate with you.....if you own a small amount of acreage....they are better off force pooling you. If you own a lot of acreage, they are better off negotiating with you. I hope this information helps you out.....if you have not been force pooled, get with a group.....there really is power in numbers. The more acreage a group has, the better lease terms they will receive from the O & G Company.

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Permalink Reply by bullbayou on September 3, 2008 at 2:59

CWGray must be one of the people I was referring to when it comes to this issue. O & G companies DO NOT have to have 70% of the unit leased to "create" a unit. Units get created all the time when O & G companies have very little leased in them if any. Sometimes they create many units in one filing, and in this case, the outer units will not be leased. So his opinion there is absolutely wrong.
Also, please do not get confused. Just because an O & G company creates a unit that your property is included in (forced pooling) does not mean a well will ever be drilled in it. However, if you are lucky enough to get a well drilled in your unit, PLEASE KNOW THIS, an O & G company cannot make any money off your property unless your property is leased. Therefore, when CWGray says the they are better off force pooling you is again INCORRECT. And, you do not have to join a group. IT ALL COMES DOWN TO THIS: If an O & G company plans to drill a well in your unit, it comes down to the terms you want. If you want terms that economically does not make sense to the O & G company, they will not lease you; therefore, they will not make any money on you. If you will take an amount that makes you happy and economically makes sense to the O & G company, then they will take a lease from you. It really is pretty simple.

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Permalink Reply by CWGray on September 3, 2008 at 3:13

First of all.....CWGray is female and the information I received came directly from an Oil and Gas Attorney, therefore, I don't believe my information is incorrect. My advice to Pete is to seek legal counsel on the subject. You really never know who is working for the O & G companies on this site and who is not. By the way....I am not. The O & G company MUST abide by Louisiana Law and cannot just arbitrally force pool a land owner's minerals without following Louisiana Guidelines for force pooling. Bull....you would do much better by trying to help these people instead of insulting those with differing opinions from yours. Be nice.

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Permalink Reply by Les Bamburg on September 3, 2008 at 3:06

CwGray, good answer but let me add a couple of comments. If a mineral owner is unleased, they will receive 100% of the revenue (production) from the well less operating costs after the operator has recouped the cost of drilling the well. Royalties are only paid to leased mineral owners and do not have operating costs deducted.

Also, I have not seen any regulation that stipulates that at least 70% of the unit must be leased. If you have a reference for this minimum level it would be useful information.

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Permalink Reply by CWGray on September 3, 2008 at 3:15

Pete....I am sorry the picture has become even more clouded by the conversation below. You can actually do a search on the Louisiana DNR site for more concrete and accurate information. No matter what you do......get legal advice before you sign anything.

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Permalink Reply by bullbayou on September 3, 2008 at 3:32

I am sorry CWGray, but I get tired of people giving out advice and info that is incorrect. If your Oil and Gas Attorney gave you THAT information, then he needs to go back to law school.
And oil companies CAN create units without having the whole unit leased (or 70%) if they DO follow the LA guidelines, which basically is notification. All I am saying is please do not advise people on this site if you do not know what you are talking about. Heresay and third person info can only misguide people.

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Permalink Reply by CWGray on September 3, 2008 at 3:55

And your resource is what??????? What exactly is your expertise in this area? Maybe you should state that before you start insulting other peoples intelligence. I mean no disrespect but your comments were very rude and unproductive.

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Permalink Reply by bullbayou on September 3, 2008 at 5:08

CWGray, I did not want to get into all of that since you could not understand it anyway, but KB did. So that is my source. Thank you KB.
As far as the difference, the first statute you reference concerns the secondary recovery of a reservoir where oil and gas has already been produced (water flood/gas flood, etc). It does not apply in this case. The second statute you reference is dealing with the creation of the unit and the subsequent drilling of the first well into that reservoir.

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Permalink Reply by CWGray on September 3, 2008 at 8:50

Thank you KB for the very informative snopsis on this topic....Bull, you would be surprised at what a simple minded little old lady like me can understand. By the way....you never did tell me what your expertise is, I guess that is a secret huh?????? I find it interesting how you use KB's information as your source.....wouldn't it have been easier to just state the source to begin with instead of calling people stupid?

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Permalink Reply by Les Bamburg on September 4, 2008 at 3:11

KB, the key difference is the increase of ultimate recovery criteria under a 5(C) unit. This places a much higher bar for the Commission in using this regulation. That is the reason the HS units are formed under the 9(B) provision which has less requirements.

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Permalink Reply by Les Bamburg on September 4, 2008 at 7:11

KB, the ultimate recovery reference is under 5(C)(1)(b) - "where the ultimate recovery can be increased".

A 640 acre drilling (and production) unit formed under 9(B) is typical for NW Louisiana deeper gas formations (Hosston, CV & HS). Shallower gas and/or oil formations may have smaller units.

5(C) units are more common in South Louisiana and are typically the size and shape of the reservoir rather than 640 acre sections.

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