Replies to This Discussion

Permalink Reply by ogmladvisor on February 8, 2010 at 15:39

Mr. Garrett:

Answers to your further questions:

If the hold out signed later, would they be compensated from IP? No, the owner would be compensated from lease date forward, not initial production.

Why include the tract and pay anyone? We invest big dollars in buying leases, and the only way we can hold them is to pool them into a producing unit. Otherwise, they expire and we have to buy them again or let someone else buy them. And as you are aware..they are expensive! Companies such as mine will go to great lengths to preserve their leasehold investment, and in doing so sometimes we are forced into situations we don't really want to be in.

ogmladvisor

Permalink Reply by j garrett on February 8, 2010 at 16:03

Wow. That's a great read. So, the operator just gets to keep the revenue of the hold-out? Hard to believe. Sorry for doubting you OGML, you too Mr. McFarland.

Permalink Reply by ogmladvisor on February 8, 2010 at 16:38

Correct, the operator keeps it. But allow me to stress one more time that we don't want to keep the money (I can hear the snickering already!), we would rather pay the royalties. An unleased interest, if large enough, does us no good down the road when we want to put a well on it or through it. If given the option of the extra production or having a lease on fair terms, a good E&P is always going to want the lease.

Permalink Reply by DJG on February 8, 2010 at 17:52

OGML,

Thanks for your posts and explinations as to your side of the equation. The TxA&M link regarding mineral/land cotenancy was helpful as well.

I think the key component for a potential unlicensed MO to consider is in this part of your sentence above:

"An unleased interest, if large enough, does us no good down the road when we want to put a well on it or through it. If given the option of the extra production or having a lease on fair terms, a good E&P is always going to want the lease."

If the acreage is is a small donut hole and the O&G does not come within 330' of your lease-line then, yes, that MO is then likely to be left out of the party.

If the mineral holding is large enough that the O&G would not want to lose out on the potential profit, or if it is large enough or configured such that the O&G will eventually need to run a lateral bore directly under that property in order to properly in-fill and produce the unit - well then, that particular mineral owner would have a lot more leverage just as to what type of deal, royalty, working interest, etc they can negotiate with the O&G.

In the case of the larger unleased mineral owner, it could very well be possible for them to eventually end up coming to much more attractive terms - including, perhaps, the stipulation that all royalty activity be accounted as if the MO had been in the unit as of the date of first production.

All of that, of course, would depend upon each individual case and would also be dependent upon just how badly the O&G either wants to - or needs to - include your land/minerals in order to properly execute their in-fill production plans for the unit as a whole

Permalink Reply by j garrett on February 9, 2010 at 2:31

I've attended a meeting with one of the RR commisioners and he made it clear that their role is to extract as much hydrocarbons as possible from the State of Texas. So, not letting a holdout keep that from happening fits with that mindset. However, I sure thought that they made the rules to be fair, such as attempting to prevent drainage with the well spacing and lease line rules. Allowing minerals to be produced without compensating the MO anything blows me away. Not even an 1/8th, nothing. And apparently with 100 years of case law and TX Supreme Court rulings on the point it is not likely to change. No wonder there are so many conspiracy theorists and untrusting mad mineral owners on this site!

Permalink Reply by farmbrad on February 9, 2010 at 0:36

In all of this discussion about force pooled, not leased vs. leased, etc..., I have a burning question. Our block of land is leased & is approx 350 acres (1/2 a unit). A big block to our west went through an auction house back in late 2008 & I don't think they got leased (their price was too expensive). We think a rival O&G leased the property to our east. Is there a source to easily look up who has leased with what O&G? I'm wondering if our O&G can form a unit for us if they decide to? If they absorb north & or south it would be a very long rectangular shape which I guess is feasible. Thanks.....

Permalink Reply by jffree1 on February 9, 2010 at 1:56

CountyRecords.com, farmbrad.

Choose the basic plan (pay per use) and not the monthly subscription. Or, send someone to the county clerk's office.

Permalink Reply by jerry smith on February 9, 2010 at 3:25

Well i have a good here some one please tell if i am right are wrong. Bought some property mineral interest from 2 different people that own the mineral interest in the same property. Well i get deed from one them and one from the other party. Then one them sent me some paper work and she had been getting royalties from the property. The other interest i own the oil company trespass on my mineral estate and i did not sign a lease with them at all so what can i do. And they refuse to pay me for it

Permalink Reply by jffree1 on February 9, 2010 at 3:27

Hire a lawyer.

Permalink Reply by jerry smith on February 9, 2010 at 3:45

do you know some would take the case with out wanting to be owner ship in my wells

Permalink Reply by Cheerleader on February 9, 2010 at 13:32

Jerry Smith,
You can't hire a lawyer fast enough!!! Like yesterday!!!!

Permalink Reply by jerry smith on February 10, 2010 at 0:36

i think Keith needs to give you a warning

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