Replies to This Discussion

Permalink Reply by Cassie on September 24, 2008 at 7:02

carol i hope you are right i got the information i gave you from a land lawyer and it was backed up by my land man so you might want to look into that. i know without a doubt that you will not recieve royalties until after the rig has made their money back that is one point i can make with assurity.

Permalink Reply by CR on September 24, 2008 at 8:20

Hello, I live in North DeSoto Parish. We have already been where you guys are now. The way it goes is, if you are force pooled, you become a 100% partner in the well. You can be held liable for any disaster that may occurr during or after the drilling since you are an actual "partner". A well about 5 miles from my home blew out and burned for 2 months or more. If I had of been 100% in that well, I could have been forced to pay my share of the temporary housing that the evacuees lived in until the Sheriff's Dept. said it was safe for them to go back home. Most Haynesville wells pay for themselves in a few months, some in a few weeks. The well in Elm Grove that Petrohawk drilled is producing 16.8 million cubic feet of gas a day on a 26/64 choke (64/64 being wide open). This well was paid for in a couple of weeks, not to say all will be this good. The smart thing for a small land owner to do is lease. The more important thing is the environmental impact, not the bonus. It takes 6 to 8 million gallons of water a day to drill a Haynesville well. This will dry up a water well in a hurry, even a small community system will go down. Make sure you have protection for your water against any damage, including chemicals and heavy metals. If you don't keep them off your land with surface rights restrictions you will be in for a big surprise unless you have a lot of acreage and have room for the rig. (a typical rig pad is no less than 5 acres) They can come across your yard and use your driveway to make the rig road. I've seen this several times and can give locations if you want to go and look. They can drain your ponds and build dams or whatever if you don't specify it in your lease. There are many addendums that need to be added to a standard lease to protect yourself and your children. Regular laws don't apply to the oil and gas industry. If unleased, you will not receive a dime until all their expenses are paid. They don't like for people to go in 100% because it makes them jump through too many hoops. They have to notify you of everything they do, even on a daily basis if necessary. They can also trump up charges that will string you along forever. Get informed, and if you feel uncomfortable trying to handle it yourself, hire an advisor or an oil and gas attorney to help you. We have made many mistakes but are learning fast. I didn't write this to step on anyone's toes but to try and help. My wife has family in RR Parish and we will help them as much as we can. Groups do better than loners so get together. The average bonus here is $20,000. with a 25% COST FREE royalty. They will try to charge you to take the gas to market but this is not your responsibilty. The only cost you should incur is for separating or market enhancement. Get your money at the well head and get royalty on the propane and the butane they take out of it. It's a lot to learn but it's something we are all having to do. Like I've said before, we didn't look for the Haynesville Shale, it found us. Now we have to make the right decisions for us and our childrens children.

Permalink Reply by Carol on September 25, 2008 at 4:45

CR: I don't doubt that they do all of that. But I am doing research. Property laws and ownership cannot be disparate. I own my land, and the oil under it. If somebody steals my cows, I don't own their truck/trailer, etc., and I wouldn't be responsible for any injuries they caused. If a property owner enters into a lease agreement with the oil/gas company, UNLESS that lease specifies that the lessee assumes all liability and holds the lessor harmless, the lessor is equally liable. However, if you don't enter into a lease and make those agreements, under US law, you are not liable for the effects of a well they drive someplace else. Seems to me that if you don't enter into a lease, you are not responsible for their costs; this is just like when somebody embezzles or takes a trust fund and misuses it. Liability follows control, under common law and in statutes. If they drilled a well that drained my property, I would have to say that they owed me for the production, 100%. Any other outcome would be unconstitutional. I don't know how those suits and laws have been formulated in the past; but it seems to me that this is an area for action. The State agency is protecting the state, but I think they have a duty to protect the citizens' interests. "regular laws" - irregular laws are actually unconstitutional. . .NOW I certainly agree that they will do whatever they can get away with - and that regardless of what "ought" to be, the reality is not always what ought to be. I'm going to do my research. One of the holdups in my lease is that I want the property protected: no draining my ponds, no taking my water and dumping salt water on my land, no storage facilities. They agree to a "no drilling," but it just says no drilling w/o permission, and "Permission will not be unreasonably denied." RIGHT! Thanks for all of your information.

Permalink Reply by CR on September 25, 2008 at 6:47

Carol, If the section or unit your property is in is force pooled and you are not signed to a lease, you have just became a partner in the well whether you want to be or not and it does not have to be on your land, just in your section. Your mineral rights still belong to you but they have just been unitized into a drilling unit in which you are now a "working partner". You can be held liable for anything that happens before, during, or after the well has been completed since legally you are now a part owner of the well. All expenses are also extracted from your share until everything is paid for. If the well cost 8 million dollars you will receive a bill for your share, depending on how many acres you own. A unit usually consists of 640 acres. If you have 40 acres you will receive a bill for 40/640ths of the total 640 which will be $500,000.00. Until the well pays for this half a million throughout all the tracts you will receive nothing. If more expenses are accrued and they always do, you will pay these also. This is a bad situation but it is the law. They created these laws at the turn of the 20th century and they definately need to be revised. Some of them were revised in the 70s like the law that states they can only drill one well per unit or section. This law was enacted to keep them from destroying the little man's land that happened to share in the same section with a politician or friend of the operating company. They would drill all the wells on Farmer John's land and leave Senator Heavypocket's land alone, although Farmer John only had 200 acres and Sen. Heavypockets had 440 acres. They get around this law by calling the other wells "affilliate" wells. There are many more things that take place we never know about. That's where an oil and gas attorney comes in. I've read leases where one sentence was 12 lines long and the print was so small I actually had to get a magnifying glass to read it. If you put the term, "no surface rights" that keeps them off of everything. If you do let them come on your place, make sure there's language to protect fences, roads, livestock, out buildings, trees, etc... They will knock down trees without giving you notice in advance where you could have sold the trees if it had of been written on the lease. On the flip side, if the well is a monster and pays for itself in a few weeks you will soon be a multi-millionare. Say it comes in at 15 million cubic feet a day and you have the 40 acres at 100%. Your share, after expenses are paid and at a price of 10 dollars per million, will be $3,421,875.00 per year. (using the royalty calculator at the geology.com website ) http://geology.com/cgi-bin/royalty.pl
So it's up to you what to do. Small landowners are better leasing and like I said, the O&G companies don't like unleased land owners. Look at how much money they are paying out on 40 acres at 100%! There are too many things to list on this forum. Call an O&G attorney and find out for sure about force pooling and the new found business advernture it creates. Thanks

Permalink Reply by msfva on September 25, 2008 at 6:55

CR, I'm going to suggest you may not be right. However, check with an attorney. Please read the many discussions on forced pooling on this site. Once a unit is formed, if you are not leased, you have several choices. You still may sign a lease. Or, if you choose not to, you have a couple of options. One, is to be a working partner, with consent. This means you put up your share of the well costs, and get paid back the profits. In this case, you are indeed responsible for the well, and all the bad things that could happen.
But, another option exists -- going "non consent." In this case, you don't put up a penny. You are responsibe for nothing. As I understand it (but, please check with an attorney), you simply wait for the drilling company to recoup all expenses for drilling the well, and then after that, all of your prorated share of the production is yours (minus operating costs).
No one has much good to say about going non consent, because it is rumored to be difficult to get good data out of the drilling company about expenses, payouts, etc. However, the upside could be huge. One risk you have in going non-consent is that the drilling company just doesn't drill your section. As someone once said, they aren't in the business of drilling wells for other people.
So... check with an attorney, but I think you ought to learn more about going non-consent.

Permalink Reply by Carol on September 26, 2008 at 4:26

Thanks very much for all of the great information. I'm going to the event Sunday. I called one of the speakers and got the name/number of the organizer, and they are leaving "will-call" tickets for me at the door. The secretary said they do have tickets now. There is a letter/report you might all be interested in reading: it is a "forensic" report on several oil/gas companies, describing the variation in the information given to royalty owners and that given to their stockholders. hmmmm... Dated October 18, 2007, it is a letter report to the NARO Board of Directors [National Association of Royalty Owners] as part of a "Gas Marketing Accountability Project (GMAP), on the top producers. APACHE was the only one that came close to accurate reporting: unfortunately, they are not in the Haynesville play. I spoke with them yesterday. But the report gives one to think - especially about why the State agencies aren't on this discrepancy. It's a tax issue for them, of course. Thanks again.

Permalink Reply by CR on September 29, 2008 at 1:44

Here's a few examples of non consent. Especially read the last one. You can ask any of these attorneys and experts to clarify this a little better.

http://en.allexperts.com/q/Oil-Gas-3147/2008/6/need-lease-land.htm
http://en.allexperts.com/q/Oil-Gas-3147/2008/8/OG-Company-Drill-Lan...
http://en.allexperts.com/q/Energy-Industry-Oil-2441/2008/6/oil-leas...

Permalink Reply by mkim12 on September 29, 2008 at 10:49

I just recieved a letter dated 9/24/08 from Empire Energy Corporation offering $6000.00 per acre to purchase my minerals in Section 1 T13N R10W. Anyone else recieve a letter like this. $6000.00 is a joke in my opinion but just wanted to see if others were being offered. They gave a ten day window to accept their offer.

Permalink Reply by Carol on September 29, 2008 at 18:37

mkim12: you should fax a copy of that to the Louisiana Attorney General's office. They issued warnings and request for info on anybody trying to scam.

Absolutely do not sell your minerals - one of the Bossier Bar Association speakers did a great presentation on leasing, and an on-going case that has changed landowner protection. If I get a chance, I'll post it.

Permalink Reply by mooncookie on October 6, 2008 at 8:39

Are you already leased?

I've never heard of this broker... you might want to ask who they are getting this for (Shell/Encana etc).

Permalink Reply by mkim12 on September 30, 2008 at 10:31

The offer was definitely to purchase and not lease, they want to secure a "Royalty Deed". The offer was unsolicited so a waving red flag went up in my mind. Have any others recieved letters such as this?

Permalink Reply by Mike Tomlin on November 25, 2008 at 6:08

As per the records of Red River Parish, Empire Energy purchased royalty from several landowners in Red River Parish. A few of them were notarized by local coushatta attorneys.

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