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Permalink Reply by R Scott Clark on June 13, 2012 at 4:29

Good Morning, If you are looking for unbiased advice, I say sign because when you get force pooled, the operator can pay for the well 3 times before they owe you a dime, therefore you probably won't ever see any money. Good Luck

Permalink Reply by Red Hills on June 13, 2012 at 8:01

Clark is incorrect.  The law is clear see RS 30:10 and A 2(e).  Oil Co only can get back the cost (1 time) for drilling and producing the well. And then, can only get it back from the production they owe you!!

 I hear this wrong advice all the time and had to reply. But, the answer to your question is complicated and a math question and depends on how good the will is and when it will pay out - all unkowns. Is it better to get a 1/5th royalty from the start or 5 time as much at some unknown time later?  Some never pay out and I've seen real bad Haynesville well as well.  If you don't lease you will likely need a lawyer to make them pay your "working interest" when the well pays out. It's too complicated for you to realistically do alone. Also expect the expenses to be padded and you can't challenge them unless you can afford a CPA to pour over $7.5 million in bills to drill the well and also another separate expert to tell you which bills were padded. So, you end up having  to wait some more months til "pay out".  But, the good news is, if you don't lease and the well pays out in say a year or 2, you get much more than the lease royalty. If for example, the lease would have been a 1/5 royalty and you don't lease,you get 5/5!  or if a 1/4 th lease you get 4/4 if you don't lease - after the well pays out. So ,after pay out you get 4 or 5 times as much per month than the lease would have given you!

The answer to your question is:  it's a gamble - nobody really can tell you for sure,and depends on factors you can't know now. I have seen people not lease and come out way better and seen some not lease and never get a dime.

You need to first decide if you want to gamble to get a higher percentage (that's really a question for a geologist)  betting the well will pay out quickly, and are willing to have an attorney at your elbow while you fight the oil Co., which will eat into your working interest gain.  You need an attorney who works  in oil and gas to help you and not many do this type of work that don't work for oil Cos.